When securing a mortgage, most homeowners focus on interest rates and payment terms. However, how your mortgage is registered on the title of your home can have long-term financial implications. At Canadian Mortgage Professionals, we believe informed homeowners make better financial decisions. Let’s break down the key differences between Standard and Collateral Mortgage Charges and why this choice matters.
What Is a Mortgage Charge?
A mortgage charge is the way a lender secures their interest in your property when they provide financing. There are two primary types in Canada:
- Standard (Conventional) Charge Mortgage
- Collateral Charge Mortgage
Standard (Conventional) Charge Mortgage
A standard charge mortgage is registered on your property’s title for the exact loan amount you borrow. Here’s what that means for you:
✅ Easier to switch lenders at renewal – You can transfer your mortgage to another lender without incurring legal fees, making it easier to negotiate better renewal rates.
✅ Transparent borrowing – Your mortgage is registered only for the loan amount, which means any additional borrowing requires a refinance or a second mortgage, both of which may involve extra fees and approvals.
✅ Greater flexibility at renewal – Because you’re not locked into one lender, you have more negotiating power when it comes to securing a better rate.
However, if you want to access home equity later (for renovations, debt consolidation, etc.), your lender may require a second mortgage registration or a refinance, both of which could involve new fees and qualification criteria.
Collateral Charge Mortgage
A collateral charge mortgage is typically registered for a higher amount than your initial mortgage loan—sometimes up to 125% of your home’s value. This can have both benefits and drawbacks:
✅ Easier access to equity – If you want to borrow more in the future (via a line of credit or additional loan), you may not need to refinance or requalify.
✅ Fewer title registration fees – Since the mortgage is already registered for a larger amount, you can access additional funds without incurring extra legal fees.
Harder to switch lenders at renewal – A collateral charge mortgage cannot be transferred to another lender without discharging the mortgage and re-registering it, which involves legal fees ranging from $600 to $1,000.
Potential for higher renewal rates – Since switching lenders is more difficult, you may have less leverage to negotiate a lower interest rate.
Which Mortgage Charge Is Right for You?
The choice between a standard charge and a collateral charge mortgage depends on your financial goals. If you prioritize flexibility at renewal and the ability to shop for the best rate, a standard charge mortgage may be best. However, if you foresee needing easy access to your home’s equity without refinancing, a collateral charge mortgage could be a better fit.
Not all lenders offer both options, so working with a knowledgeable mortgage broker in Calgary—like Canadian Mortgage Professionals—can ensure you choose the best structure for your needs.
Ask a Mortgage Expert Before You Sign
Before committing to a mortgage, it’s essential to understand how it’s registered and what that means for your future borrowing power.
At Canadian Mortgage Professionals, we help clients navigate the fine print, ensuring they make the best decision for their long-term financial health. Whether you’re buying your first home, refinancing, or renewing, we’re here to guide you every step of the way.
Call us today to discuss your mortgage options or visit us online to learn more!
Serving Calgary & Beyond | Trusted Mortgage Experts | Helping You Save More
