How is a Collateral Charge at Tangerine different from Conventional Charge?
Read about collateral charge mortgages.
When a house is mortgaged, it's used as security for a loan. This security is registered with a land registry office and is commonly known as a "charge". This charge gives the lender the legal right to claim the registered house if the loan is in default. There are two types of charges that can be registered by a lender; Conventional (or Standard) and Collateral. At Tangerine, our Mortgages are registered as a Collateral Charge.
How is a Collateral Charge at Tangerine different from Conventional Charge?
Collateral Charge Mortgage
- Registered for 100% of the property value
- The specific details of the mortgage loan are not included in the charge that is registered on title against your house. A separate credit agreement contains the specific terms of the mortgage loan, such as the amount, interest rate and payments.
- Creates room for future borrowing up to the charge amount without incurring legal costs*
- Option to add a Home Equity Line Of Credit under current charge without incurring legal costs*
- Transferring to another lender would involve refinancing through a lawyer with legal costs
Conventional Charge Mortgage
- Registered for the loan amount
- The specific details of the mortgage loan such as the amount, interest rate and payments are included in the charge registered against your house.
- Future borrowing would involve refinancing through a lawyer with legal costs
- Adding a Home Equity Line Of Credit would involve refinancing through a lawyer with legal costs
- Can be transferred to another lender without incurring legal costs if the other lender agrees
To learn more about mortgage security, visit the Canadian Bankers Association
*Subject to application approval under current Tangerine credit criteria.