Collateral vs. Standard Mortgage Charge

What Is a Standard Charge Mortgage?

A standard charge mortgage is the traditional way lenders register a mortgage.
It’s registered for the exact amount you borrow, and once it’s paid off, the charge is discharged from title.

Key points:

• Registered only for the loan amount.
• Simple and inexpensive to transfer to another lender at renewal.
• Common with most banks and credit unions.
• To borrow more later, you must refinance and re-register.

Example:
You borrow $500,000, and your mortgage is registered for $500,000.
When it’s paid off, it’s fully removed from your title.

This type of mortgage is straightforward, flexible, and gives you freedom to shop around for better rates in the future.

What Is a Collateral Charge Mortgage?

A collateral charge mortgage works differently.
It’s registered for more than the amount borrowed — often up to 125% of your home’s value.
This gives the lender the ability to lend you additional money later without new legal work.

Key points:

• Registered for more than the loan amount (commonly 100%–125% of property value).
• Allows access to additional funds without re-registering the mortgage.
• Still requires you to re-qualify under current lending guidelines to borrow more.
• Harder and more expensive to switch lenders later.
• Common with lenders such as TD Canada Trust, Tangerine, and some credit unions.

Example:
You borrow $500,000, but the lender registers your mortgage for $625,000.
You still owe $500,000, but that extra registered amount gives the lender room to advance more funds in the future if you qualify.

The Main Differences

Standard Charge Mortgages:

• Easier to transfer or renew with another lender.
• Registered only for the loan amount.
• Must refinance to borrow more later.
• Transparent and easy to understand.

Collateral Charge Mortgages:

• Registered for more than the loan amount.
• Access to extra funds without new legal fees (if you still qualify).
• Harder to switch lenders because full re-registration is required.
• May limit your ability to negotiate better rates at renewal.

Pros and Cons

Standard Charge – Advantages:

• Easy to transfer or switch lenders.
• Lower legal costs at renewal.
• Simpler and more predictable.

Standard Charge – Disadvantages:

• You must refinance to borrow additional funds later.

Collateral Charge – Advantages:

• Can increase or re-advance your mortgage without new legal work.
• Convenient for those planning to borrow against their home later.

Collateral Charge – Disadvantages:

• Difficult and costly to switch lenders (usually $700–$1,000 in legal fees).
• Can reduce negotiating power at renewal.
• May block secondary financing such as a second mortgage or HELOC.

Second Mortgages and HELOCs

Collateral charge mortgages can make it difficult to add a second mortgage or home equity line of credit (HELOC).
Because the lender often registers up to 125% of the property’s value, there may be no room left on title for another lender to register behind it.

With a standard charge mortgage, this is usually much easier — other lenders can register a second position if there’s enough equity.

Which Type Is Better?

It depends on your goals:

• If you want flexibility and freedom to shop for better rates later, a standard charge is likely the better fit.
• If you prefer easy access to future borrowing for renovations, investments, or debt consolidation, a collateral charge may be convenient.

A mortgage broker can help determine which option makes the most sense for your long-term plans.

Example Scenario

You buy a home for $700,000 with a $560,000 mortgage.

If your mortgage is registered as a standard charge, you can easily transfer to another lender at renewal — often with no legal fees.

If it’s a collateral charge, you can access more funds later without re-registering — but you’ll likely pay new legal costs if you decide to move your mortgage elsewhere.

How to Check Which Type You Have

You can confirm by:

• Reviewing your mortgage commitment or disclosure statement, or
• Requesting a title search from your lawyer or title company.

If you’re unsure, a mortgage broker can review your documents and confirm it for you.

How a Mortgage Broker Helps

Different lenders use different registration types — and most borrowers aren’t told which one they’re getting until closing.

As brokers, we work with both types and help you choose the structure that fits your goals today and your plans for the future, so you’re never surprised by unexpected restrictions or costs later.

Ready to Get Pre-Qualified?

Apply Now to start your secure pre-qualification.
It only takes a few minutes and won’t affect your credit.

Once submitted, we’ll:

• Review your goals and long-term plans,
• Compare lenders and mortgage structures, and
• Recommend the option that gives you the most flexibility and peace of mind.

Make your next mortgage decision with confidence — and understand exactly what’s being registered on your home.