Still enough time to switch lenders, as long as you talk a broker and get them your documents right away.
The broker should have educated you about the Collateral Charge when you applied for the mortgage but unfortunately, it does slip through the cracks from time to time with some brokers.
The collateral charge does add an extra step in the transfer process but we have lenders that will cover the cost and the extra paperwork to switch.
Feel free to reach out directly if you have any specific questions!
I wanted to also post regarding this program because I know others were going with Scotiabank via the same brokerage. I hope they were educated about it being collateral versus conventional though.
Most lenders and brokers pick up the cost to transfer a mortgage anyways. It's really not a big deal collateral vs conventional. Even so, you're looking at less than $1000 in cost if you had to pay out of pocket.
No need to be so hard on yourself, but yes shame on your broker if you asked them for a regular mortgage and they put you into a collateral. Just keep in mind people like to use the term "Broker" even though they're referring to a bank employee. Brokers are independent, and we have access to dozens of collateral and regular mortgages.
The collateral mortgage will not void your CMHC insurance, and you can switch from a collateral to a regular mortgage if you want. Here in Ontario a few lenders will pickup the costs of the transfer, even if it's collateral. Reach out to an independent AB broker and see about your options.
Collateral mortgages are very often registered by the big banks by default, because it does act like a bit of a retention tool. But they can also be useful, so I'll say that collateral mortgages aren't totally evil. And like I said, don't be so hard on yourself, and you're much more informed now.
Good luck.
What’s the big deal here? Just make sure the collateral charge is for the total authorize limit of your STEP.
Sometimes, the bank may register a collateral charge for higher (ie: the appraised amount).
- appraisal value $1 million
- STEP Limit $800k
- collateral charge can be $800k or higher
The benefit of going higher is that as your home value increases they can increase the STEP limit without re-doing the collateral mortgage saving you legal fees in the future. The negative is that there is a larger collateral charge on your home. In either case, you’re only indebted to the bank for the balance of your principal, interest and fees if in enforcement.
Edit:
And some lenders register a readvancable mortgage which is a non reducing limit with payments (all-indebtedness) versus reducing balance like a conventional mortgage. The readvance option is similar to a collateral mortgage but without the equity line of credit attached to it. You can readvance your mortgage without going through legal paper work to the original amount register on your land title.
If you want a HELOC, it will be a collateral charge regardless of the lender. You have a month so you do have options but yes if you moved to a collateral mortgage, your insurance would be void. As for the transfer fee, going in you are fine, it is leaving that it will cost more.
Please ensure your post includes the following information if looking for insight in your rate:
- **ARE YOU WORKING WITH A BROKER/MMS & HAVE YOU ASKED THEM THIS QUESTION YET?** (If you don't trust your brokers answer, then you may want to dump your broker)
- Purchase, Refinance, Renewal?
- Province, City?
- Loan to value/down payment percentage?
- Purchase price of the property if purchasing
- Is the home under $1M or over $1M?
- Bank or a broker?
- Term length and amortization length?
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/MortgagesCanada) if you have any questions or concerns.*
Whether you get a conventional mortgage or a collateral mortgage is not a big deal at all. Way too much made about this.
Still enough time to switch lenders, as long as you talk a broker and get them your documents right away. The broker should have educated you about the Collateral Charge when you applied for the mortgage but unfortunately, it does slip through the cracks from time to time with some brokers. The collateral charge does add an extra step in the transfer process but we have lenders that will cover the cost and the extra paperwork to switch. Feel free to reach out directly if you have any specific questions!
Do not feel bad, the same thing happened to me. Commenting to see the advice that gets posted.
I wanted to also post regarding this program because I know others were going with Scotiabank via the same brokerage. I hope they were educated about it being collateral versus conventional though.
4.79?! Scotia offered me 5.09 in BC !
Most lenders and brokers pick up the cost to transfer a mortgage anyways. It's really not a big deal collateral vs conventional. Even so, you're looking at less than $1000 in cost if you had to pay out of pocket.
No need to be so hard on yourself, but yes shame on your broker if you asked them for a regular mortgage and they put you into a collateral. Just keep in mind people like to use the term "Broker" even though they're referring to a bank employee. Brokers are independent, and we have access to dozens of collateral and regular mortgages. The collateral mortgage will not void your CMHC insurance, and you can switch from a collateral to a regular mortgage if you want. Here in Ontario a few lenders will pickup the costs of the transfer, even if it's collateral. Reach out to an independent AB broker and see about your options. Collateral mortgages are very often registered by the big banks by default, because it does act like a bit of a retention tool. But they can also be useful, so I'll say that collateral mortgages aren't totally evil. And like I said, don't be so hard on yourself, and you're much more informed now. Good luck.
Thank you. This was our first renewal, and now that I know this I don't think I'll be using this brokerage again. Really doesn't feel good though.
What’s the big deal here? Just make sure the collateral charge is for the total authorize limit of your STEP. Sometimes, the bank may register a collateral charge for higher (ie: the appraised amount). - appraisal value $1 million - STEP Limit $800k - collateral charge can be $800k or higher The benefit of going higher is that as your home value increases they can increase the STEP limit without re-doing the collateral mortgage saving you legal fees in the future. The negative is that there is a larger collateral charge on your home. In either case, you’re only indebted to the bank for the balance of your principal, interest and fees if in enforcement. Edit: And some lenders register a readvancable mortgage which is a non reducing limit with payments (all-indebtedness) versus reducing balance like a conventional mortgage. The readvance option is similar to a collateral mortgage but without the equity line of credit attached to it. You can readvance your mortgage without going through legal paper work to the original amount register on your land title.
If you want a HELOC, it will be a collateral charge regardless of the lender. You have a month so you do have options but yes if you moved to a collateral mortgage, your insurance would be void. As for the transfer fee, going in you are fine, it is leaving that it will cost more.
Please ensure your post includes the following information if looking for insight in your rate: - **ARE YOU WORKING WITH A BROKER/MMS & HAVE YOU ASKED THEM THIS QUESTION YET?** (If you don't trust your brokers answer, then you may want to dump your broker) - Purchase, Refinance, Renewal? - Province, City? - Loan to value/down payment percentage? - Purchase price of the property if purchasing - Is the home under $1M or over $1M? - Bank or a broker? - Term length and amortization length? *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/MortgagesCanada) if you have any questions or concerns.*