Understanding Collateral Charge Mortgages
Marci • January 9, 2013
Collateral charges aren’t new, but they are something you should learn about as they are becoming more common in the mortgage world. If you haven’t heard about collateral charge mortgages, or don’t understand them, you’re not alone. It’s one of the financial world’s “good news / bad news” items.
The definition of a collateral charge is a charge on the title of a property attached to a promissory note – ie – a requirement to pay a loan made secure by a property. While having a promise to pay, attached to a line of credit (the typical use of collateral charges) makes sense, this format is growing in use with mortgages.
The good news about collateral charges is they allow a re-advanceable form of lending. If you want more money down the road, you won’t need to re-register the mortgage. This will save you the pains of refinancing along with costs of the legal fees.
They can be registered for the full value of the home – or even more! (One of TD Bank’s allows for them to register up to 125% of the property value). Ultimately a collateral mortgage is always registered for more money than you require at closing – 100% of the value or more. In a standard mortgage, your mortgage is registered with Land Titles only for the amount you need.
The bad news is moving your mortgage at renewal will cost legal fees as you will need to re-register with a new lender. This means, you want to avoid collateral charges if you want the ability to shop around when your mortgage is up for renewal. A collateral mortgage is not transferable without a lawyer or notary. It’s like starting the mortgage over when you want to switch lenders.
Additionally, second mortgages or home equity lines of credit are often impossible to obtain without a significant appreciation in the value of your home because the registration amount is already at the full value (or more), so there may be little or no equity room.
Most mortgage professionals see collateral charges as a way for banks to retain customers at renewal, but most borrowers want to keep their options open. You can see the push and pull. If you want to know more about this – or any other mortgage advice, please drop me a note.
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Summer in Canada is short—but sweet. With warm weather and long evenings, it’s the perfect time to get outside and enjoy your outdoor space, no matter how big (or small) it is. Whether you have a tiny patio or a sprawling backyard, a few creative upgrades can go a long way toward turning your space into your personal summer oasis. Below are ideas for every type of outdoor space, from cozy balconies to large backyards! For Patio-Only Spaces Limited to a balcony or concrete patio? No problem! Small spaces can still offer big enjoyment. 1. Upgrade the Flooring Add interlocking tiles to give your concrete floor a more polished look—wood grain, grass panels, or composite styles are all popular, easy-to-install options. 2. Create an Outdoor Movie Zone Hang a pull-down screen or grab a portable stand, pair it with a mini projector, and voilà—your very own outdoor movie theatre under the stars! 3. Start an Herb Garden Railing planters are perfect for growing basil, mint, parsley, and more. Fresh herbs at your fingertips—and they smell amazing too! 4. Add Some Twinkle Wrap fairy lights around your railing or overhead beams to bring cozy vibes and nighttime charm. 5. Grill Like a Pro Maximize your BBQ season with a compact baby-que. Weber’s Q Series is a great option for small spaces without compromising grilling power. For Small Yards A little yard can still pack a lot of personality. Here are ways to make the most of every square foot: 1. Game Time! Add a mini putting green or an axe-throwing target (just be safe!) for quick bursts of backyard fun that don’t take up much space. 2. Warm Up Your Nights Add a heating lamp or portable fire bowl to keep your evenings cozy well into the fall. 3. Grow Your Own Produce Build or buy a raised garden box to grow tomatoes, cucumbers, lettuce, or other easy vegetables. Gardening is relaxing—and delicious! 4. DIY Bird Bath Make a pedestal bird bath using an old vase, a platter, and strong glue. You likely have everything you need already at home—and the local birds will thank you! For Big Yards If space isn’t an issue, the sky’s the limit! Here are some larger-scale projects to take your yard to the next level: 1. Build a Catio Yep, it’s a “cat patio”! Give your feline friends a safe way to enjoy the outdoors with a screened-in enclosure attached to your home. 2. Create a Permanent Fire Pit Use stones and a fire ring to build a beautiful, safe fire pit. You can even add airflow cutouts to reduce smoke—perfect for those marshmallow roasts! 3. Tile a Dining Area Install paving stones or tiles to define an outdoor dining space. Add a table, some string lights, and enjoy al fresco meals all summer long. Need More Inspiration? If none of these projects quite fit your vision, check out Home Depot’s DIY backyard ideas—complete with step-by-step instructions and material lists to help you bring your outdoor dreams to life. Soak It Up While It Lasts No matter the size of your space, there’s always something you can do to enhance your outdoor experience. So get out there, get creative, and make the most of these sunny summer days. See you back here in August—with more tips, tricks, and homeowner insights!
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