How Is Your Mortgage Registered?

Traditional vs Collateral Mortgage Charges

These two options offer different terms, though some lenders may not allow you a choice. Here's what you need to know.

How is your Mortgage Registered?

The right choice may save you money and hassle later on.

There are two ways to register a mortgage on title: traditional charge and collateral charge. Way back, most lenders registered mortgages as traditional charge. But over the past few years, more and more lenders, especially the major banks, have moved to collateral charge mortgages.

Choosing the right mortgage that suits your current and future needs will ultimately save you money (and hassle) when you least expect it.

What's the difference between a traditional versus collateral mortgage?

Traditional (or Conventional) Charge

  • Registered with the land registry office for the actual amount of the mortgage loan (the amount you borrow).
  • Allows the option to switch to another lender at renewal time without incurring legal fees, and provides leverage to negotiate competitive renewal rates with your current lender.
  • However, because this type of mortgage only secures the actual loan amount, if you want to access equity at a later date (for example, a line of credit) you'll need to re-register your mortgage and incur those extra fees.

Collateral Charge

  • Typically registered for a larger amount than your initial mortgage loan (up to 125% more).
  • 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. This means paying discharge and legal fees to register a new mortgage if you choose to switch to another lender. Legal fees can range from $600 to $1,000 (depending on the provider).
  • Tapping into too much of your home's equity may limit your options at renewal time.

Do all lenders offer collateral charge mortgages?

Yes, most lenders offer collateral mortgages — in fact, there are lenders who will only offer these types of registered mortgages.

Your True North Mortgage expert broker will discuss your best options in how your mortgage should be registered, and which lender suits you best. It's important to consider what you may want to do with your home equity in the future, if you think you'll need extra funds for improvements or investments.

Read more about getting a Home Equity Line of Credit.

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

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