Mortgage Renewal puzzle : Is this normal?

[Suelavie]

Hi!  I am in the process to renew my mortgage in a new financial institution (MCap).  Last month, I learned that Mcap was having a promotional rate that is very good : 2.44% for 5 years term (my present rate is 2,69%).  The thing is : this rate is only available if the file is completed and signed  before December 31rst, so of course every steps have been rushed

(Please forgive the long message + my weird English… Translating technical stuff like that is quite a challenge.)

Now the thing that puzzles me is that my mortgage broker (who is a person I hired very recently and whom I have communication difficulties with) sent me that message yesterday :

« To reassure you, it will be normal for you to sign a higher mortgage amount of around 183K + 10K = 193K.The mortgage deed is added an additional 10K to ensure that the amount "published" is higher than the amount paid, all of which is adjusted upon receipt of the statement of account. ».

Now after seeking advice with 2 persons who know about mortgage stuff in my entourage, I sent an e-mail to my mortgage broker saying that I won’t sign a document with the notary if the loan deed does not correspond to the amount owed to my former lender plus the penalty (because I close my mortgage before the term to take opportunity of this rate).  Or she would have to explain me better the reason for this.

She then sent my this answer, coming from the cie (FNF Canada) who is preparing the file for the lender:

"Hello, our procedure is that the clients sign the documents in advance, so since we do not have the statement of account we increase the act by 10K for publication purposes only to ensure that the amount published is higher than the amount disbursed. An adjustment is made when disbursed and the exact amount is disbursed."

Does this procedure seems normal and safe to you?  Would you require any type of written guarantee?  Would you sign for a deed that would be higher than the amount owned (+ the penalty)?  Thank you for your advices!

[Linea_Norway]

Sorry, it sounds too complicated for me to understand. Just a general advice, don't sign anything you don't fully understand or where you don't trust all information is being provided.

[SwordGuy]

I'm not in your country, but that sounds sketchy as hell.

[Sibley]

Again, not in your country, but I think you need to do some more shopping around. This sounds very fishy. And if I'm correct in thinking that you don't have to renew your mortgage yet, maybe just wait until you need to?

[Aegishjalmur]

It sounds like what they are doing is bumping up your mortgage amount to cover any costs as they do not know what the exact closing costs will be so want to ensure that you qualify at the higher amount to avoid any last minute issues like you needing to bring money to closing or not qualifying any more. They will then adjust it back down once they know the exact figures.

[Suelavie]

Hello,

Thank you all for your responses.

Yes, Aegishjalmur, this is what I understand.  I am now surfing on the FNF Canada website in the hope to find out black on white about this procedure.  Or if I could have a communication coming directly from them (not going through my mortgage broker), that would, I guess, be sufficient to lower my concerns (they are a very large corporation, so I guess this means they are reliable; I try not to be cynical or leaded by fear while being ignorant... but not stupid either...)

So yes, Sibley, SwordGuy and Linea_Norway: I really want to feel safe before signing anything.  Yes, I could wait another month, but I doubt I could have such a good rate.  Again, many thanks, Mustachian's advices are precious.

[Omy]

Maybe check with other mortgage brokers (at different institutions) to see if this is standard practice or not?

[Suelavie]

-----------FINAL UPDATE--------

For those of you interested to know the end of the story: I had a conversation with two notaries (for free :-) and both told me that it was a normal (even if not frequent) process when you transfer your mortgage to a new financial institution and the procedure needs to be done quickly causing the new institution to not have the time to receive the statement of account from the previous institution before the signature at the notary.

So, I signed the deed and everything is perfect, meaning that the final amount on my mortgage documents is the correct one.

I am so happy to have follow up on that opportunity.  I will save a quite a bit of money in the next five years...  Thank you again everybody for your feedback.