Collateral charge mortgage
Definition
A mortgage registered against your property for more than the actual loan amount, letting you increase the limit later without re-registering.
Common at TD and Scotia. Makes inter-lender switches harder mid-term.
A collateral charge is registered for more than you borrow — often up to 100–125% of the home's value — so you can re-advance or add a HELOC later without new legal fees. TD and Scotiabank register most of their mortgages this way.
The downside shows up at renewal: a collateral charge generally can't be 'switched' to a new lender for free the way a standard charge can. The new lender needs a full refinance with legal costs, which quietly reduces your ability to shop your renewal.
It's not automatically bad — if you'll likely tap equity during the term, the flexibility is useful. Just know it's there so it doesn't surprise you when you try to move lenders later.
Sources
- Renewing your mortgage (Financial Consumer Agency of Canada)
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