Collateral Charge vs. Standard Charge Mortgages: What’s the Difference (and Why It Matters)
When most people think about getting a mortgage, they’re focused on the rate, the lender, and the monthly payment. But there’s one lesser-known detail that can seriously impact your flexibility later on: whether your mortgage is registered as a standard charge or a collateral charge.
This is one of those behind-the-scenes things that doesn’t usually come up until it’s too late—but it can make a big difference in how easily you can refinance, switch lenders, or access your home equity down the road.
Let me break it down for you…
What is a Standard Charge Mortgage?
A standard charge is the traditional way mortgages have been registered in Canada. It’s straightforward: your mortgage is registered with the exact amount you borrowed and the agreed terms (rate, amortization, etc.).
✅ Pros:
Easier to switch lenders at renewal (potentially saving you money)
Often cheaper to discharge if you pay it off
More transparent terms and fewer surprises
🚫 Cons:
You’ll need to refinance if you want to borrow more later (which may come with new legal fees and qualification hurdles)
What is a Collateral Charge Mortgage?
With a collateral charge, your mortgage is registered for more than the amount you’re actually borrowing—sometimes up to 125% of your home’s value. This gives the lender more flexibility and control if you ever want to borrow more money (like a line of credit or refinancing later).
✅ Pros:
Easier to access equity later without needing to re-register your mortgage
Can be bundled with other lending products (like a HELOC or business loan)
🚫 Cons:
Harder to switch lenders at renewal without paying legal fees
Can limit your ability to negotiate or shop around
May not be disclosed clearly at the time of signing
Why Does It Matter?
Most borrowers aren’t told up front which type of charge they’re getting. Some major banks only offer collateral charges now, which can lock you into their system unless you pay extra to move.
If you’re the kind of person who likes to keep your options open, a standard charge gives you more flexibility. If you know you’ll want to tap into your home equity in a few years (say, for renovations or investments), a collateral charge might make sense—as long as you’re okay sticking with the same lender.
My Take? Ask Before You Sign
As your mortgage agent, I always make sure my clients know what kind of charge they’re getting and how it affects their future options. There’s no one-size-fits-all answer—it’s about what makes the most sense for your situation.
Got questions about your current mortgage charge or want to explore better options for your renewal? Let’s talk. I’ll walk you through it in plain language and help you make a move that works for the long game.
