Have you found yourself in a situation, where your collateral mortgage is up for renewal and you wanted to switch to a different bank for a better interest rate on your mortgage? Your bank then tells you that if you wish to switch to a different different bank, you will have to discharge your collateral mortgage and in addition you would have to pay fees once again to register a new mortgage.
A collateral mortgage allows the applicant to use their home as a collateral security to register the mortgage up to 125% of the value of their home. The down side to a collateral mortgage is that on a later date if the applicant wishes to refinance to get money for renovations or to consolidate all their debt in to one, the existing bank or any other bank will not approve the request, as their home has already been tied in to the collateral mortgage and the applicant is left with no further equity on his property to secure the request for refinancing.
Always find out from your bank, if you are being offered a conventional or a collateral mortgage and that you understand the difference between the two and any penalties that you would be liable to pay in the event you decide to change to another bank.
A great blog was posted on Mortgage Broker News.ca which will give you information.
If you or if you know of anyone in a similar situation and would like advice on how you can move forward, please contact the team MiMortgage.ca today. To get pre-approved apply now through our secure website or speak to one of our agents at (866) 452-1100.