Transferring Your Mortgage to Another Lender at Renewal

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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.

Frequently Asked Questions

Do I pay a penalty to transfer my mortgage to another lender at renewal?

No. If you complete the transfer at your term maturity date (or within the renewal window), no prepayment penalty applies. However, it may be advisable to budget for notary fees, discharge fees, and possibly an appraisal, although many lenders offer to reimburse these costs.

How long does a mortgage transfer take in Quebec?

The full process generally takes 30 to 45 days, including approval by the new lender, credit verification, property appraisal if required, and the notary appointment. It is recommended to start the process at least 60 to 90 days before your term maturity date.

What are the fees associated with a mortgage transfer?

Fees include notary fees ($1,000 to $1,800 in Quebec), discharge and registration fees at the Land Registry ($400 to $800), and appraisal fees if required by the new lender ($300 to $500). Many lenders offer credits to cover these costs.

Can I transfer my mortgage and change the amount at the same time?

A simple transfer (switch) maintains the same mortgage balance. If you wish to borrow more or substantially change the terms, it becomes a refinance rather than a transfer, which involves different requirements and fees, including meeting OSFI's 80% loan-to-value ratio requirement.

Do I need a mortgage broker to transfer my mortgage?

It is not mandatory but strongly recommended. An AMF-certified broker has access to a wide network of lenders and can negotiate the most competitive rates and terms for your transfer. Furthermore, broker services are generally free for the borrower, as the new lender pays the commission.