How your mortgage is registered could COST YOU MONEY
The odds are that your current mortgage is registered on title as a ‘regular charge’. The benefits of having a mortgage registered as a ‘regular charge’ include:
- At the end of your mortgage term (for example after a 5 year term), you are permitted to transfer or switch your mortgage to another institution without having to pay legal fees.
- Having your mortgage registered as a ‘regular charge’ also provides you with the opportunity to add a secured line of credit with the institution of your choice.
- If you were to lose your job, just as a large number of Canadians have over the last few years, your credit slips a bit, and you need to access some of the equity in your home to pay off some bills, to start a business, or to go back to school, then you can add on a 2nd mortgage.
The alternative is registering your mortgage on title as a ‘collateral charge’. Effective October 18th 2010, all new TD Canada Trust mortgages are registered as ‘collateral charges’, and may register up to 125% of the value of your home to title. So how does it affect you if your mortgage is registered as a ‘collateral charge’?
- If you would like to refinance your home at some point during your term, you can do so without having to pay legal fees.
- If you choose to switch your mortgage at the end of your term, it will cost you approximately $900 in legal fees, where otherwise it would have been free.
- If you would like to add a secured line of credit, you can only add one with the financial institution that holds your mortgage – you are not free to make your own choice.
- If needed, you will not be able to add a 2nd mortgage to your property with another institution.
- Theoretically, it could allow your institution to charge you a higher interest rate on renewal or refinance, since there are associated switching costs.
How would you want YOUR mortgage registered?