Both collateral mortgages and conventional mortgages are registered against title, and in both cases the mortgage lender the lender has the right to sell your property should you default in payments. The items in the table are the very broad overview of typical agreements for each type of mortgage.
Be aware that the items listed below are usual characteristics of these different types of mortgages. However, every mortgage company has different variations on the themes. It is critical to discuss options with a knowledgeable mortgage broker who can explain the differences and present the best options for your personal situation.
Collateral Charge Mortgage
Conventional Charge Mortgage
Registered mortgage amount
– May be higher than the financed amount, and if it is, you may have difficulty changing to another lender at renewal
– Generally matches the financed amount
– No credit terms are contained in the mortgage or registered in the registry
– The mortgage contains the main credit terms
Securing debt and possibility of additional funds
– Used to secure one or more existing or future debts
– Traditionally used to secure a mortgage to purchase a property
– No need to register a new mortgage to secure additional funds
– A new mortgage must generally be registered to secure additional funds
– No legal fees for additional funds secured by the mortgage
– Legal fees apply to discharge the initial mortgage and create the new mortgage
Transferring a mortgage to another lender. For example, on renewal (subrogation in Quebec)
– A new mortgage must be generally be granted to the other lender, and the initial mortgage discharged
– Generally possible if no additional funds are requested
– There are legal fees for discharging the initial mortgage and creating the new one
– There may be legal fees for completing the transfer
– Generally, all debts secured by the initial mortgage must be repaid to the initial lender
– New lender pays off the existing mortgage balance to receive the transfer of the mortgage. It is not necessary to repay other debts to permit the transfer
Discharging the morgage
– possible once all the debts secured by the mortgage are repaid in full
– Possible once the mortgage loan is repaid in full
– At the borrower’s request
-Automatic or at the borrow’s request, depending on the lender and the province
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