Attention All Mortgage Specialists: New Alberta Land Title Fees Make Some Mortgages Costly!
New land title fees are months way in Alberta. With the most recent provincial budget the Alberta government has implemented new land title fees for the land title system. Because the cost of registering a mortgage is based on the dollar value of the new mortgage, mortgage specialist should be aware of how these changes will affect their clients. Not understanding the increased fees, in both the transition period and long term, can cost your client money. If you have any questions at all, please contact the real estate lawyers at Kahane Law Office in Calgary.
New Land Title Fees in Alberta are Much Higher
When people buy a house and get a mortgage, they will be exposed to the new land title fees. Similarly, someone who is refinancing their home will also have to pay the higher new land title fees. All land title fees have been increased through the most recent budget. The new fee increases range from a 50% increase to increases of six times the former fee levels. These new land title fees will coming into place for documents registered on or after July 1, 2015. See our post from yesterday warning realtors of the deadline for avoiding fee increases for more details.
How the New Land Title Fees Affect Mortgages
The increased fees will affect all newly registered mortgages. The land title fees are made up of both a fixed amount and a variable amount. Both of these are increasing. The Mortgage Broker News has some further examples of the new land title fees. The following chart is an example of the old fees versus the new land title fees.
|New Mortgage $350,000||Current||New|
|Mortgage FixedMortgage VariableTotal||$50.00$70.00$120.00||$75.00$420.00$495.00|
The Warning to Mortgage Specialists & Agents in Alberta
People in the mortgage industry should be aware of three significant things with the new land title fees. The consequences to their clients are financial and some may be avoided. These are:
People will pay more for their mortgages
This is the obvious one but must be taken into account. A homeowner’s decision refinance will generally be based around it being economically viable. While the fees for the new mortgage registration usually come out of the mortgage proceeds, a client needs to take the additional cost into consideration.
Timing leading up to the July 1st, 2015 deadline
It is extremely important to ensure that lawyers in Alberta get mortgage instructions well in advance of the new land title fees coming into place. There will be many aspects that will lead to the registration documents being registered before or after the July 1st deadline. It is important for mortgage specialists to be aware of these factors and minimize those related to the mortgage. Mortgage agents must try to ensure that the mortgage instructions are not the delay. Clients will need to know that the delays in instructing can depend on many factors. It is vital that they are explained the importance of getting documentation to meet conditions to the mortgage specialist quickly in the days leading up to the deadline. Similarly, it will be important to both get documents to the lender and stay on top of the lender to make sure instructions are sent as soon as possible to avoid the new land title fees.
A significant long term issue with the new fees
Some lenders register collateral mortgages for the value of the home and not the amount of mortgage being advanced. If a home is worth $600,000 and a person is refinancing for 70% LTV ($420,000) then a collateral mortgage like this will be registered for $180,000 more than the funds being advanced. The additional fees in this situation are $216. The more the disparity between the mortgage advance, and the registered amount, the greater the cost to the client.
If a client has a condo, with titled parking and a storage locker, the mortgages is registered against all three titles. this means that any additional cost will the be multiplied by the number of registrations. Note: the additional costs are not the full amount but those additional registrations have increased as well.
More Questions About The New Land Title Fees In Alberta?
The real estate lawyers at Kahane Law Office are here to help during these times of change. If you have any questions about the fee increases, please do not hesitate to connect with our office. Call 403-225-8810 or email today to contact us.