When switching lenders during a Desjardins mortgage renewal in Quebec, notarial fees are almost always required to register the new hypothec (mortgage) against your property. These fees encompass the notary's professional services, registration duties, and other disbursements, making it a critical cost component to factor into your decision-making process.
Unlike other Canadian provinces which often use simple charge documents, Quebec's civil law system mandates a notary for all real estate transactions involving a hypothec, ensuring legal validity and public registration.
Understanding Notarial Fees in Quebec
In Quebec, the notarial act for registering a mortgage is more than just a formality; it's a legal pillar of the province's civil law. A notary in Quebec plays a crucial role in ensuring that property transactions, including the establishment or modification of a mortgage, are legally sound, duly registered in the land register, and binding on all parties. This process protects both the borrower and the lender by establishing clear legal title and priority of rights.
The fees for a notary are not standardized and can vary based on the complexity of the file, the notary's experience, and the region. Typically, for a standard mortgage registration, you might expect to pay anywhere from $1,200 to $2,500, including disbursements. These disbursements cover items like registration fees with the Land Register (Registre foncier), title searches, and property certificates, which are essential for legally securing the new mortgage.
When Are Notarial Fees Applied During a Desjardins Renewal?
If you merely renew your Desjardins mortgage with Desjardins itself, and there are no changes to the registered hypothec (such as porting a mortgage or increasing the principal balance to the point it exceeds the original registered amount), it is highly unlikely you will incur new notarial fees. Desjardins, like other institutions, simply updates its internal records.
However, if you decide to switch from Desjardins to another lender at renewal, or even within Desjardins you significantly increase your mortgage amount beyond the original registered hypothecary claim, you will absolutely need a notary. The new lender requires a new hypothecary deed to be legally registered against your property. This applies whether you are moving to a big bank like RBC, a credit union, or a monoline lender. The notary will prepare the new hypothecary deed, explain its terms, ensure all parties understand their obligations, and oversee its signing and registration.
The Impact of Notarial Fees on Switching Lenders
Considering notarial fees is paramount when evaluating whether to switch lenders for a better rate during your Desjardins mortgage renewal. While a lower interest rate can save you money over the term, a portion of these savings might be offset by the notarial costs. This is where a careful calculation becomes essential. It's not just about comparing rates; it's about comparing the total cost of borrowing, including all associated fees.
Many lenders, especially those actively seeking new clients, may offer incentives to cover some or all of these notarial fees. It's crucial to inquire about such offers when shopping around. Some lenders provide 'switch bonuses' or 'reimbursement of legal fees' which can significantly reduce your out-of-pocket expenses, making a switch more financially appealing. Always get these offers in writing to avoid any misunderstandings.
Jay Klair — FSRA Level 2 mortgage agent — will personally review your offer for free. One business day reply.
Worked Example: Notarial Fees vs. Interest Savings
Let's illustrate the financial impact. Suppose you have a $300,000 mortgage balance up for renewal with Desjardins. Desjardins offers you 5.59% for a 5-year fixed term. Another lender offers you 5.29% for the same term. This 0.30% difference might seem small, but it adds up.
On a $300,000 balance at 5.59% amortized over 20 years (typical remaining amortization) compounding semi-annually, your monthly payment would be approximately $2,079.79. Over a 5-year term, you would pay roughly $124,787.40 in total payments. If you secured a rate of 5.29%, your monthly pago would be approximately $2,030.70, totalling $121,842.00 over 5 years. This represents an interest saving of approximately $2,945.40 over the 5-year term. If your notarial fees for switching lenders amount to $1,800, you would still realize a net saving of $1,145.40 ($2,945.40 - $1,800). This example clearly demonstrates that even with significant notarial fees, a better interest rate can still result in substantial savings.
Always use a mortgage renewal calculator to compare specific terms and costs, and ask your mortgage agent to run different scenarios for you, factoring in all potential fees including notarial costs and any lender rebates.
The Role of Mortgage Brokers in Quebec Renewals
A licenced mortgage broker in Quebec can be an invaluable asset during your Desjardins mortgage renewal process, especially when considering alternative lenders. Brokers have access to a wide network of lenders, including banks, credit unions, and monoline lenders, many of whom compete for your business. They can efficiently shop around for the best rates and, crucially, identify lenders who might offer to cover or reimburse your notarial fees.
Your mortgage broker can help you understand the fine print of each offer, compare total borrowing costs, and navigate the specific requirements of switching lenders in Quebec. They act as your advocate, ensuring you secure the most favourable terms possible, with full transparency regarding any associated costs. This expertise is particularly beneficial when dealing with Quebec's unique legal requirements for mortgage registration.
Staying Informed: OSFI Rules and Your Renewal
Even at renewal, it's important to be aware of the regulatory landscape. While the November 2024 exemption from the OSFI B-20 stress test for renewal switches (when you don't increase your loan amount) provides some flexibility, the principle behind it is sound: ensuring borrowers can afford their mortgages. If you are significantly increasing your mortgage amount or refinancing, the stress test will likely still apply, meaning you'll need to qualify at a higher benchmark rate.
Staying informed about such regulations helps you make strategic decisions about your mortgage. This includes understanding that while you might avoid the stress test when simply switching lenders at renewal without increasing your mortgage, any significant re-financing or equity-take-out could trigger a full re-qualification under tougher standards, impacting your ability to secure the desired loan amount or even switch lenders.
Frequently asked
Do I always pay notarial fees when renewing my Desjardins mortgage in Quebec?
No, you typically only pay notarial fees if you switch lenders or significantly alter your mortgage (e.g., increase borrowed amount above original hypothecary claim) at renewal. If you simply renew with Desjardins without changes, new notarial fees are unlikely.
What do notarial fees cover for a mortgage in Quebec?
Notarial fees cover the notary's professional services for drafting and registering the new hypothecary deed, explaining its terms, and ensuring its legal validity. They also include disbursements like registration duties at the Land Register and title searches.
Can I avoid notarial fees when switching lenders at renewal?
You cannot avoid the fundamental requirement for a notary in Quebec when switching lenders, but some lenders offer to reimburse or cover these fees as an incentive to attract new clients. Always ask about such offers when comparing options.
How much are typical notarial fees for a mortgage switch in Quebec?
Notarial fees in Quebec for a standard mortgage registration or switch can range from approximately $1,200 to $2,500, depending on the notary and the complexity of the file, including all necessary disbursements and registration duties.
Does the OSFI stress test apply if I switch lenders at Desjardins renewal in Quebec?
As of November 2024, if you are switching lenders at renewal and not increasing your mortgage principal, you are exempt from the OSFI B-20 stress test. However, if you increase your loan amount or refinance, the stress test will likely still apply.
Should I use a mortgage broker for my Desjardins renewal in Quebec?
Yes, a mortgage broker can be highly beneficial. They can compare offers from multiple lenders, include Desjardins, identify potential savings, and help negotiate terms, including the possibility of having notarial fees covered, especially crucial in Quebec's unique legal context.