TD Mortgages To Become Collateral Charges
TD is making a big change with respect to how it registers its mortgages.
Effective October 18, all new TD mortgages will be registered as “collateral charges.”
A collateral charge is a different way to secure a home loan than a standard mortgage. "The terms of a collateral mortgage are outlined in a loan agreement that's not registered," says Invis's Gary Siegle. "With a regular mortgage, the terms are in a 'registered document'."
Effectively, collateral charges allow lenders to change the interest rate and/or loan more money to qualified borrowers after closing, without involving a lawyer.* That saves the borrower legal costs if he/she needs to withdraw equity from their home.
In TD’s case, customers will now be able to register their mortgage for up to 125% of the value at closing. Hence, if one’s property value goes from $200,000 to $250,000, qualified borrowers will be able to withdraw most of that new equity without refinancing.
Read more at http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/10/td-mortgages-to-become-collateral-charges.html