The term of Collateral Charge has been heard by many of us today, yet many of us don’t quite understand it. It refers to how the mortgage is registered on title.
A mortgage, or charge in legal terms, can be registered on title as regular charge or collateral charge, depends on the lender’s instruction to the solicitor.
With regular charge, the provisions regards to the mortgage details matches your actual mortgage details such as loan amount, balance due date, etc.
With collateral charge, the registered mortgage amount can be higher than the actual funded mortgage amount and balance due date is usually On Demand.
The common Collateral Charge Mortgages offered today are:
- TD mortgages – Starting on Oct. 18, 2010, all new TD mortgages are collateral mortgage;
- Scotia’s STEP mortgage
- CIBC Home Power Plan
- BMO Homeowner Ready Line
- RBC Homeline Plan
- National Bank Mortgages
- Manulife One Mortgage
- FirstLine Matrix Mortgage
- MCAP Fusion Mortgage
The main advantage of collateral mortgage is that you can refinance/take out the equity from your existing home at any time without legal fees.
The main disadvantage of collateral mortgage is that it is not transferrable. The mortgage can not be assigned to another lender. In another words, if a customer would like to switch mortgage lenders, it has to be done as refinance.
For more detailed information concerning the products we are offering, please contact us by phone or email.