Transferring Your Mortgage to Another Lender: The Complete Guide
When your mortgage term reaches maturity, you have a valuable window to shop the market and potentially transfer your loan to another lender offering better terms. This process, commonly called a switch in the industry, allows you to take advantage of more favourable rates without incurring the prepayment penalty that would apply mid-term. In Quebec, thousands of borrowers change lenders each year at renewal, a perfectly legal process governed by Canadian regulation.
Why Consider Switching Lenders?
- Secure a lower interest rate than what your current lender is offering in their renewal proposal.
- Access more flexible terms: more generous prepayment privileges, accelerated payment options, or the ability to make lump-sum payments.
- Benefit from better customer service or a lender better suited to your current financial needs.
- Leave a chartered lender with restrictive mortgage conditions for one offering a more open or portable product.
The Transfer Process Step by Step
- Receive and analyze the renewal offer: Your current lender will send a renewal offer between 120 and 21 days before your term maturity. Do not sign immediately. Use this offer as your comparison benchmark.
- Consult an AMF-certified mortgage broker: A broker can shop among dozens of lenders to find the most competitive rate and terms. Their services are free to the borrower since the lender pays the commission.
- Submit an application to the new lender: The new lender will conduct a credit check, request proof of income, and may require a property appraisal. The approval process typically takes 5 to 15 business days.
- Visit the notary: In Quebec, the transfer mandatorily requires a notarial deed. The notary will discharge the existing mortgage and register the new mortgage at the Quebec Land Registry.
- Finalize the transfer: The new lender remits the balance to the outgoing lender on the term maturity date. Payments then begin according to the new schedule agreed upon with the incoming lender.
Expected Costs for a Transfer in Quebec
Unlike renewing with the same lender, a transfer involves legal and administrative fees. Notary fees range from $1,000 to $1,800 in Quebec and cover the mortgage deed, discharge of the old mortgage, and Land Registry searches. Discharge fees at the Land Registry add $400 to $800. If the new lender requires a professional appraisal, expect an additional $300 to $500. However, many lenders offer transfer credits ranging from $1,000 to $3,000 to attract new clients, often covering all or most of the fees.
Simple Transfer Versus Refinancing: What Is the Difference?
It is essential to distinguish a simple transfer from a refinance. A transfer (switch) keeps the same mortgage balance and simply changes the lender and loan conditions. A refinance, on the other hand, modifies the amount borrowed, triggering new OSFI requirements, notably the 80% maximum loan-to-value ratio. If your goal is simply to get a better rate at renewal without increasing your debt, a transfer is the simplest and least expensive path. Your mortgage broker can guide you toward the option best suited to your situation.