indicatorUnderstanding Deferrals

Mortgage deferrals for Albertans

How does a mortgage deferral work? How does it affect repayment? Here’s what to consider before deferring your mortgage.

How does the deferral work?

A deferral on your mortgage means that payment of both principal and interest are suspended for a defined period of time. During this time, interest still accumulates at the applicable rate, as set out in your Loan Agreement, on the outstanding principal balance. If you have life and/or disability insurance on your mortgage, those premiums will continue to be debited from your account to maintain your coverage.

How does repayment work?

When your mortgage payments resume after the end of the deferral period, we apply your payments first towards all interest accumulated during the deferral period (typically part of your payment goes towards interest and part towards your outstanding principal balance). Interest will also continue to accumulate at your applicable rate on the outstanding principal balance. Once all interest accumulated, as a result of the deferral period has been paid, payments will resume being applied in accordance with the mortgage terms.

For example:

  • Let’s say that the interest is $500 per month and the deferral period is six months (April to September) so $3,000 interest accumulated during the deferral period.
    • No payments are debited from the payment account unless those payments are for life and/or disability insurance during the deferral period, if applicable.
  • Monthly mortgage payments of $2,000 resume in October.
  • October’s $2,000 payment is applied towards interest, decreasing the accumulated interest owed from $3,000 to $1,000; $500 interest accumulates against the outstanding principal balance in October.
  • November’s $2,000 payment is applied towards interest. The remaining $1,000 of accumulated interest from the deferral period, plus the additional $500 of interest accumulated in October are now fully repaid. The remaining $500 fully pays the interest for the month of November.
  • December’s $2,000 payment is applied in accordance with the mortgage terms.

Your payment amounts won't change during the term of your mortgage.

  • If your amortization period is longer than your current mortgage term. When your mortgage term matures and you renew your mortgage, your monthly payment amount will increase, so that the amortization period of your mortgage is not increased or lengthened as a result of the deferred payments.
  • If you are in the final term of your mortgage (scheduled to pay off your mortgage in full when your mortgage term matures). As a result of the deferred payments, you will not have paid all the principal and interest owing by the end of the amortization period of your mortgage. There will be a lump sum due, which you can either make as one lump sum payment on your mortgage maturity date, or increase your monthly payment amount when your deferral period ends.

What should you consider?

Deferring payments may significantly increase your interest costs over the life of your mortgage, so it's important to evaluate your financial situation and priorities before exercising this option. Please connect directly with us about the possible impacts of deferring your mortgage payments.

Repayment strategies

If you are concerned about not having sufficient funds available when your payments resume, please connect with us prior to the end of the deferral period to explore more manageable options.

To help reduce the impact of increased interest costs, you are able to repay deferred payments at any time during the term of your mortgage without penalty, however be sure to connect with us directly (do not use ATB Personal or mobile), so we can ensure your repayments are applied correctly. Please note this repayment may affect your prepayment options in the future.

Helpful definitions

Amortization period: The total number of years that it’ll take to pay off your loan or whole mortgage

Debit: To take out of your account

Deferral period: The defined period of time that your payments are suspended

Interest: The charges that accrue (or accumulate) over time, which are determined by applying the rate to an amount owing from time to time under a loan or line of credit

Outstanding principal balance: The current amount owing on your principal balance
Payment account: The account you designated, from which your payments are withdrawn

Principal balance: The original amount of money you borrowed

Rate: The interest rate you pay under your loan, line of credit or cardholder agreement

Secured: When you use an asset, such as your home, as collateral to secure the loan

Term: The length of time you’re committed to in the conditions set out in the loan agreement (including mortgages) or lease agreement, such as your interest rate and payment amount

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