Often-Forgotten Fees That Change Everything in Your Mortgage Break Calculation

When a Quebec borrower thinks about breaking their mortgage, the first instinct is to check the penalty amount. This is understandable: the prepayment penalty is generally the largest expense. But stopping there is a common mistake. Numerous ancillary fees, often ignored or underestimated, can add $2,000 to $5,000 to the total cost of the operation. Failing to include them in the break-even calculation distorts the analysis and can turn a seemingly profitable decision into a poor financial choice.

Notary Fees: A Must in Quebec

In Quebec, unlike most other Canadian provinces, every mortgage transaction requires a notary. During refinancing, the notary prepares the new mortgage deed, conducts searches and verifications at the Quebec Land Registry, manages trust funds, and handles the new mortgage registration. Notary fees for refinancing range from $1,000 to $2,000, depending on file complexity and the number of deeds to be prepared. If you stay with the same lender, fees may be slightly lower. If you switch lenders, the notary must also prepare the discharge deed for the old mortgage, adding supplementary fees.

Discharge and Cancellation: Freeing Your Title

Discharge (quittance/mainlevee)

A notarial act by which the lender confirms that the mortgage has been fully repaid and consents to the cancellation (removal) of the mortgage registration at the Quebec Land Registry. Without a discharge, the old mortgage remains registered against the property title even if the balance is zero.

Discharge fees include notary fees for preparing and signing the discharge deed, as well as publication costs for cancellation at the Land Registry. The total generally ranges from $200 to $700. Some lenders also charge their own discharge preparation fees (administrative fees of $100 to $300). It is important to know that if you refinance with the same lender, a discharge is not always necessary, as the lender may simply modify the existing mortgage terms.

Professional Property Appraisal Fees

Most lenders require a professional appraisal during refinancing to confirm the property's market value and calculate the loan-to-value ratio. In Quebec, a certified appraisal by an accredited appraiser (member of the Ordre des évaluateurs agrees du Quebec) costs between $300 and $500 for a standard residential property. Atypical properties, income properties, or properties in remote areas may cost more. Some lenders accept automated valuation models (AVM) in certain cases, which reduces or eliminates this fee.

Title Insurance: An Often-Overlooked Protection

Title insurance protects both the lender and the buyer against title defects not detected during searches, including cadastral errors, undischarged mortgages, document fraud, or encroachments. During refinancing, some lenders require a title insurance policy rather than an up-to-date location certificate, which can be more economical. The one-time premium ranges from $250 to $400 and is payable at the notary signing. If a recent location certificate (less than 10 years old and with no modifications to the property) is available, some lenders may accept it instead.

Other Fees Not to Forget

• New lender file fees: some institutions charge $200 to $500 for opening and processing the refinancing file, although this practice is becoming less common in a competitive market.
• Mortgage brokerage fees: in most cases, the broker is compensated by the lender. However, for complex files or with private lenders, brokerage fees payable by the borrower may apply. The AMF broker must disclose these fees before signing.
• Property tax adjustments: when switching lenders, municipal and school property taxes are adjusted pro rata. Depending on the transfer date, you may need to pay an adjustment of several hundred dollars.
• Mortgage insurance transfer fees: if your mortgage is insured by CMHC, Sagen, or Canada Guaranty, transferring the insurance to the new lender may involve specific fees or conditions.
• Opportunity cost: the money used to pay all exit fees could have been invested elsewhere. On $10,000 in fees with a hypothetical 5% return, the annual opportunity cost is $500.

The Complete Checklist for an Exact Calculation

Before making your decision, ask your AMF-certified mortgage broker in Quebec to prepare a detailed table including each expense item. The LDPSF requires complete disclosure of fees and financial consequences. Your list should include: the prepayment penalty (with the lender's exact calculation), notary fees for the new deed, discharge fees, appraisal fees, title insurance if applicable, lender file fees, tax adjustments, and any brokerage fees. The total of these items can easily exceed $10,000 for a typical refinancing in Quebec, an amount that deserves to be calculated precisely rather than estimated roughly.