Do I Need a Lawyer to Switch Lenders at Mortgage Renewal in Alberta?

As your mortgage term ends, another lender may offer a better rate. Moving your mortgage is often possible, but it is more than a phone call: your current lender's charge has to come off title and the new lender's charge has to go on.

This article walks through what generally happens in Alberta, who usually handles the paperwork, and the costs and contract terms worth checking before you commit.

This article covers the law of Alberta.

What switching lenders means on title

A mortgage is a charge on your land that secures a debt. When you switch lenders, the old mortgage is discharged and the new lender is added to title. So a switch involves two steps: removing the old lender's charge and registering the new one.

Your new lender will want its mortgage registered in the proper priority. Priority between mortgagees is decided by the serial number the Registrar assigns, not by the date of signing.

Do you need a lawyer?

A lawyer, notary or commissioner of oaths usually prepares the discharge documents, which are then submitted to the land title registry office, which removes the lender's rights and updates title. A discharge is normally in the prescribed form, signed by the mortgagee and accompanied by the proper affidavit of execution.

For the new mortgage, the mortgagor executes it in the prescribed form, or to the like effect. New lenders often have their own instructions for how the mortgage must be signed and registered, so many borrowers use a lawyer to coordinate everything. Ask your new lender what it requires, and ask a lawyer what they would handle for you.

Discharge of the old mortgage

Once a mortgage is fully paid, the lender must give you a discharge of mortgage within 30 days. A lender cannot charge a fee or expense for the discharge, and a lender who fails to provide it, or charges for it, commits an offence with a fine of up to $500.

You can ask the lender to confirm in writing that the mortgage is paid in full, since most lenders do not send this unless asked. Once the discharge is entered on title, the land stops being liable for the principal sum or the part discharged.

If a lender cannot or will not sign a discharge, a judge's certificate that the secured money has been paid can allow the Registrar to discharge the mortgage.

Costs and contract terms to check

Registration fees are set by the Tariff of Fees Regulation and are required when documents are submitted. If the Registrar does not accept a mortgage for registration, the levy is returned to the payer.

A prepayment penalty is usually the higher of three months' interest on the balance or the interest rate differential. Open mortgages allow prepayment without penalty. Whether any charge applies when your term ends or you leave early depends on your contract, so read it closely or ask your lender for a written statement. A federally regulated lender will give a written statement of the prepayment charge on request.

What to do next

• Find your renewal date and read the prepayment terms in your current mortgage.
• Compare offers from the current lender and any new lender in writing.
• Ask the new lender what its lawyer or registration requirements are.
• Ask your current lender for a written payout statement and confirmation that the mortgage will be discharged.
• Have a lawyer review the new mortgage documents before you sign.

Frequently asked questions