If you do, then you may cringe when you hear about the new ‘COLLATERAL MORTGAGES’ now used by all the big banks. So what is a collateral mortgage and what does this mean?
It means that they have the right to register the mortgage in excess of 100% of property value (regardless of actual loan amount), thereby indicating to any other potential future creditor “THAT THERE IS NO EQUITY IN YOUR PROPERTY”. Hence you are stuck with your bank.
It means that they have the right to increase your interest rate (up to as much as Prime + 10 Per Cent) at their discretion, just like they did with lines of credit during the 2008/9 credit crunch.
It also means that they can effectively ‘SECURE’, your existing ‘unsecured’ credit cards, loans, and lines of credit AGAINST YOUR PROPERTY, if you miss any payments. So if anything goes wrong, like job loss etc., and you have been relying on two incomes to pay the bills (even if you continue to pay your mortgage on time) the bank can force you to sell your house and/or put you into ‘Power of Sale’ if you miss you’re your credit card, loan or line of credit payments. At the very least, you will have to pay for any such actions by the bank, which will be very expensive. This was never the case before. And know this. Even if you can access more credit with the bank, is it likely to be as ‘competitive’ as another institution? We think not because they no longer have any competition (do they?) since they have become your only choice when you have a collateral mortgage.
The thing is, that you may not be aware of the negatives, and the fact of the matter is, that with a Collateral Mortgage you are giving the bank more Power and more Control than ever, and we think that is pretty scary.
When you get your mortgage through us, we will only offer you a bank mortgage as a last resort, meaning that is the only place that will accept you. Needless to say, we do very few bank mortgages these days, and when we do, we make sure you understand the ramifications of a ‘Collateral Mortgage’.
Folks we have over 40 lenders, all reputable and national companies with excellent rates, products and terms. We want you to understand that the ‘Terms’ of a mortgage are often more important than the ‘Rate’ since they can cost you dearly. The truth is that these ‘Non-Bank’ or monoline lenders keep our big banks competitive. Without monolines, mortgages would cost more, much more, and so we support the monolines first, which benefits you, and benefits Canadians as a whole, over the longer run.
Who should you get your next mortgage from? A bank? Or from us? We think the answer should be abundantly clear.