A standard charge mortgage is your basic old-fashioned mortgage. When you secure a standard charge mortgage, the amount you borrow is the amount that is registered on the title that protects the financial institution if you can’t make your payments. When your term is up, you can either renew your mortgage or switch your mortgage to a different lender. Usually if you are not changing any of the fine details the new lender will cover the cost of the switch in most cases.

Standard charge mortgages have set terms and are non-advanceable. So, if you must borrow more money you will have to reapply and re-qualify for a brand-new mortgage. There will be costs included with breaking your existing mortgage and cost to secure a new one.

Collateral Charge Mortgage

A collateral charge mortgage will likely have multiple parts include in it. This type of mortgage will usually allow the borrower to add a line of credit or a personal loan to the mortgage. In most cases permitting the borrower to re-borrow any part of the principal already paid down.

A Home Equity Line Of Credit Is A One Example Of This

With a collateral charge a mortgage your lender will usually apply for a higher amount than you are borrowing. This could be for the full property value or occasionally lenders will go up to 125% of your properties overall value. However, if the value of your property increases you will not have to rewrite your mortgage to borrow more money. If you qualify, you will be able to borrow more money against your mortgage as a value of your property goes up.

If you were considering switching your mortgage to another lender when your term is up, you could be forced out of your mortgage which will likely cost you some legal fees. Another point to consider is that with a collateral charge mortgage you could possibly be limiting your ability to secure a second mortgage if you ever need it.

What Is The Best Mortgage Option

There are pros and cons to both options and finding the best option for you depends on your financial situation and what gives you the most flexibility to suit your needs. This will always be a better question handled by a mortgage expert in a real conversation rather than reading it in an article.

It’s our job to know the ins and outs of mortgage financing listen to you and assess all your needs and after all of that is done, we are able to recommend the best mortgage contract terms and conditions to meet your needs. We work with many lenders, and we have many options to offer you. Don’t get stuck choosing from the limited options a single institutional will likely offer you.

We would love to have a conversation with you about all the financing options available and figure out what will best suit you, your lifestyle as well as your future goals. It would be our pleasure to speak with you to answer any questions you may have.

We provide expert mortgage advice to both individuals and businesses. With over 20 years of experience we’ll ensure that you’re always getting the best guidance from top experts in the entire industry.