For anyone considering buying a home in Alberta, it’s important to educate yourself on both the local real estate market as well as how large of a mortgage you can truly afford. In this RateHub.ca blog series, we are looking at the average home prices in various cities and provinces and using our provincial mortgage calculator to walk you through the monthly mortgage payment calculations.
According to the Canadian Real Estate Association (CREA), the average home price in Alberta is $378,892. That price has risen 3.6 percent over the last year, but Alberta housing still remains affordable compared to much of the rest of Canada. But what does owning an average Alberta home look like in terms of a monthly mortgage payment? Let’s look at an example that is priced close to the provincial average home price and run the numbers with our Alberta mortgage calculator.
The four-bedroom home seen above is priced at $378,888 and is located in the Bergman neighbourhood of Edmonton. Using this house as an example, we’ll be calculating the monthly mortgage payments using both a 5% and a 20% down payment. For both calculations, we will use a 5-year fixed mortgage rate of 3.04% and an amortization period of 25 years.
With a 5% down payment:
A 5% down payment on a $378,888 home is $18,944. In this example, the down payment is less than 20%, so you would also be required to pay for Alberta CMHC insurance (mortgage default insurance). In this case, the Alberta CMHC insurance is $9,898 and is included in the total mortgage of $369,842. Assuming a 5-year fixed mortgage rate of 3.04%, your monthly mortgage payment would be $1,758.
With a 20% down payment:
A 20% down payment on a $378,888 home is $75,778. And because you made a down payment of 20% or more, you would not need to pay for Alberta CMHC insurance. So, in this example, your total mortgage would be the purchase price minus your down payment ($378,888 – $75,778 = $303,110). Once again, assuming you took on a 5-year fixed mortgage rate of 3.04%, your monthly mortgage payment would be $1,441.
Beyond your mortgage, there are several closing costs to consider, such as the Alberta land transfer tax (LTT). For this example, your total LTT is only $111, because Alberta levies a much smaller fee instead of a percentage of the purchase price of your home. Please note that you would have to pay for this fee with cash on closing day.
Our calculator tells you what your monthly mortgage payment would be but you can also choose to pay in more frequent intervals. Most lenders offer the choice of monthly, bi-weekly or accelerated bi-weekly payments. You can read more about your mortgage payment options here.