TD Mortgage Changes
Starting October 18th, TD Bank is changing the way they register mortgages. TD will be registering all new mortgages by way of a collateral charge rather than a traditional charge. TD will also register mortgages for up to 125% of the appraised value of a property.
What's the bottom line?
Although TD will be registering mortgages for 125% of the property value, clients may still have to qualify for a loan increase and may still require an appraisal to justify any increase in borrowings.
Also, Clients will not be able to easily switch their TD mortgage to another lender as the costs associated with re-registering a new mortgage may make them less likely to do so. Because it will cost more to switch to another lender, TD clients may have less bargaining power at renewal.
The RBC Advantage
At RBC, our clients are provided with mortgage choices so that they can choose what works best for their circumstances and their financial goals.
Our traditional residential mortgage is structured as a traditional charge. With our traditional mortgages, clients have the ability to top up their mortgage to the original mortgage amount without re-registering their mortgage and incurring legal costs (known as built in add on).
Our RBC Homeline Plan is structured as a collateral charge because this is necessary in order to provide clients with the benefits and choice of multiple loan segments. With our RBC Homeline Plan, clients can register up to 100% of the value of their home, which means they may access additional equity in their home in the future without re-registering their mortgage and incurring legal costs. It also enables clients to borrow up to their available limit any time – their available credit automatically increases up to their plan limit as they pay down amounts owing, with no need to reapply for credit.
And, our clients always have the option to refinance their mortgage if the property value has increased, subject to standard lending criteria and appropriate legal fees.
What's the difference between a collateral & traditional mortgage, legally speaking? *** a very good answer ***
A traditional residential mortgage contains the terms of the loan and the security for the loan all in one document. A traditional residential mortgage can only secure one loan. Because a traditional residential mortgage is both the loan agreement and the security, if a client wishes to switch to another lender, the mortgage can be transferred/assigned (switched) to the other lending without having to register a new mortgage.
A collateral mortgage does not contain the terms of the loan. It is the security for the debts owing by the client to the bank. The client will then have one (or more) loan agreements with the lender which outline the terms of the loans that are secured by the collateral mortgage. A collateral mortgage can secure many products or many loans offered in connection with a single product (for example, the RBC Homeline Plan).
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Jason.Wang@rbc.com,
Mortgage Development Manager,
RBC Royal Bank of Canada | T. 604-809-9264
http://mortgage.rbc.com/jason.wang
http://services.rbc.com/advice/main.xml
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