Second Mortgages in Alberta: Priority, Registration and Risks

You may be thinking about borrowing against the equity in your home without touching your existing mortgage. A second mortgage is one way people do that, but it sits behind the first lender, and that ranking shapes the cost, the risk and how easily it can be arranged.

This article explains in plain terms how a second mortgage is registered in Alberta, how its priority works, what the registration levy looks like and what can happen if you fall behind. It is general information, not advice on your own file.

This article covers the law of Alberta.

What a second mortgage is in Alberta

Under the Land Titles Act, a mortgage is a charge on land created merely to secure a debt or loan. A second mortgage is simply another mortgage registered against the same land while the first one is still there.

A registered mortgage works as security only. It does not transfer the land, so you remain the registered owner. To register one, the borrower signs a mortgage in the prescribed form or to the like effect.

How a second mortgage is registered

A second mortgage is registered the same way as a first mortgage and carries its own levy. Documents go to a Land Titles office on the prescribed form, by mail or drop-off, and fees are required when you submit. The alberta.ca page notes that in-person service was paused in Edmonton and Calgary, so confirm your options by phone.

Some lenders use a standard form mortgage. The lender files its standard terms with the Registrar, and a mortgage registered using them must say it consists of those terms, set out the principal sum, and be dated and signed by the borrower.

Once accepted, the document is recorded in the Alberta Land Titles Automation (ALTA) database with a registration number, and the submitter receives a registration notice.

How priority works behind the first lender

The Registrar gives an instrument a serial number only after the request is examined and found complete and in proper form. Priority between mortgagees is decided by that serial number. Instruments on the same land rank by registration, not according to the date they were signed.

That is why a second mortgage ranks behind the first: the first has the earlier serial number. A registered mortgage also keeps its priority for the advances and obligations it secures, including advances made after another instrument is registered. A revolving line of credit up to a stated principal sum has the same feature.

Rankings can be changed by agreement. A person entitled to a registered mortgage can postpone their rights by filing a postponement in the prescribed form, which puts those rights behind the others as if registered later. This is how a first mortgagee can agree to rank behind a later lender, or the reverse.

What registration costs

The mortgage levy payable to the Registrar is $50 plus $5 for each $5,000 or portion of the principal secured. The levy grows with the principal secured, so a larger second mortgage means a higher levy. For submissions received on or after October 20, 2024, the rate rose from $1.50 to $5 per $5,000.

• If the Registrar does not accept the mortgage, the levy is returned to the payer.
• If the new lender is the same lender as on a subsisting mortgage and the new mortgage supplements or replaces it against one condominium unit, the formula applies only to the additional interest or principal.
• An amending agreement that increases the principal is levied only on the increase.
• Other costs, such as legal fees and lender charges, depend on your arrangement and are worth asking about up front.

What happens if payments are missed

In a mortgage enforcement action, a lender's right is generally restricted to the mortgaged land, and a borrower cannot waive that protection. On a foreclosure order, the default redemption period is six months for land other than farm land and one year for farm land.

There are exceptions. Those protections do not apply to mortgages given by corporations. They also do not apply to a high-ratio mortgage as defined in the regulations, so they may not help a borrower on an insured high-ratio first mortgage. Whether your situation falls into an exception depends on the facts.

Interest terms also matter. No fine, penalty or higher interest rate may be taken on arrears of principal if it raises the charge above the rate on principal not in arrears. Charging interest at an annual rate above 35 per cent is a criminal offence, and interest includes all charges and expenses for advancing credit.

What to do next

• Get your first mortgage terms and check for any limit on further borrowing or charges.
• Ask the second lender for the full cost in writing, including every fee.
• Have a lawyer review the mortgage before you sign, especially the interest and default terms.
• Ask whether a postponement will be needed to fix the ranking.
• After closing, keep your registration notice and confirm what is on title.
• When the loan is repaid, ask the lender for a discharge; it must be provided within 30 days of full payment and cannot be charged for.

Frequently asked questions