TD Collateral Charge Options

Should you register your TD collateral charge for 125% of the property value?

All TD mortgages are registered as collateral charges.

With a collateral charge, the "charge" (the lien registered on the property) can be for a higher amount than the initial loan amount, this gives you the flexibility to restructure your mortgage financing in the future, with fewer additional setup costs.

Advantage

Registering the collateral charge for a higher amount could be useful to you in the future if you would like to borrow additional money from your home equity above the original mortgage amount or Flexline plan limit amount with fewer additional setup costs.

Possible Disadvantage

A potential downside to this would be if in the future your personal finances suffer, causing you to no longer qualify for financing with TD.

In this scenario, a high collateral charge amount would limit your ability to get secondary financing. If the TD charge amount registered on your property is for a higher amount than your home's value, it would be unlikely for an alternative or private lender to be willing to lend new money.‍

Conclusion:

Registering a TD collateral charge for 125% of the property value can be convenient in the future if you need to borrow additional money from home equity, but it may limit your ability to get secondary financing if your personal finances suffer.

Generally speaking, our opinion is that having the charge registered for the higher amount makes sense for most people because it's more likely to be useful than to be a detriment.

However, it is important to consider the potential downside of a high collateral charge amount if you are considering this option.