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How Is Your Mortgage Registered?

Standard vs Collateral Mortgage Charge

Your mortgage registration on title can affect your access to home equity or cost you more at renewal time. Do you have a choice? Here's what you need to know.

Nov 04, 2022

Originally posted May 8, 2016

Hindsight is 20/20: The right choice at the start may save money and hassle.

There are two ways to register a mortgage on the home's title: standard charge and collateral charge:

A standard (conventional) charge means that your mortgage is registered for the actual mortgage loan amount, though you may incur penalties and fees if you want to dip into your home equity for a line of credit later.

A collateral charge means the amount registered is 'padded' for growing room (up to 125% of the home's value) to allow future access to home equity. In this case, you would avoid the title-change fee if you want to borrow more, but you may run into increased restrictions and higher rates at renewal time.

Note: There is also a 3rd type of mortgage registration called 'On Demand' which is treated similar to a collateral registration (check with lender for more details).

In the past, most lenders typically registered mortgages as a standard charge. But that has shifted. Now, most lenders, especially the big banks, register your mortgage as a collateral charge to make it easier for you to borrow more money later.

Knowing and possibly choosing your mortgage registration at the beginning may ultimately save you money and hassle, plus make you aware of the details if you go to make a change.

Standard vs. collateral mortgage, what's the deal?

Standard (Conventional) Charge

  • Registered with the land registry office for the actual mortgage loan amount (the amount you borrow).
  • Allows the option to switch to another lender at renewal time without incurring legal fees (or may be covered by new lender).
  • Provides leverage to negotiate competitive renewal rates with your current lender (because it's easier to switch to another lender).
  • If you want to access equity later (for example, a line of credit), the lender may register it on title as a 2nd position mortgage (or 3rd or 4th, etc.) which would incur extra registration fees OR they may refinance (which will incur penalties and fees).

Collateral Charge

  • Typically registered for a larger amount than your initial mortgage loan (up to 125% of the home's value, depending on lender).
  • Makes it easier to access the home's equity for renovations, investments or debt consolidation (for example, a line of credit).
  • Non-transferrable to another lender at the time of renewal. If you choose to switch to another lender, you'll have to pay discharge and legal fees involved in registering a new mortgage (legal fees can range from $600 to $1,000 depending on the provider).
  • You may have to pay a higher rate at renewal, either because your mortgage is now larger (tapping into your home's equity) or because it's harder for you to switch lenders (extra penalties and fees) and you'll have less leverage to move.

Do all lenders offer collateral-charge mortgages?

No, not all. Many lenders offer collateral mortgages, especially the big banks. But some lenders prefer standard registration because they're easier for clients to move their mortgage, keep renewal rates lower, and reduce (or eliminate) fees if you do decide to switch lenders.

Do you have a choice in how your mortgage is registered?

Sometimes, yes; again, it depends on the lender. Our clients usually consider other factors when choosing a mortgage product and lender (such as their best rate or flexible options). Still, if a standard or collateral charge is a higher priority for you, we can help you make the right choice.

Ask your expert True North Mortgage broker about your best options. It's important to consider your future needs — if you think you'll need extra funds for improvements or investments, or prefer more flexibility at renewal time.

Shopping for the right mortgage can be overwhelming. We're here to help. We'll assess your situation and offer the best solution for an easy, stress-free process.

We get back to you shockingly fast.