CBC marketplace recently posted a video about collateral mortgages (Feb 27, 2015). They were highlighting the fact that TD Canada Trust only provides clients with collateral mortgages and unfortunately does not proactively provide their clients with enough information on the downsides of these mortgages.
The video went as far as to show hidden cameras in the branches speaking with staff about their (TD Canada Trust’s) mortgages.
There are many plus sides to collateral mortgages however it is quite important that clients are aware of the downsides of collateral mortgages such as having increased costs potentially when trying to switch to another lender at renewal as well as additional costs potentially in the way of appraisals and more.
As someone who offers the TD Canada Trust mortgage product, as well as dozens of other lenders, it is important to let clients know, in-depth, the different terms associated with each mortgage and lender in helping clients choose the right mortgage for their needs.
The Toronto Star also recently reported on collateral mortgages stating that these mortgages can trap’ you as well as your ‘freedom to move will be constrained’. http://www.thestar.com/business/2015/02/17/a-collateral-mortgage-can-trap-you-roseman.html(Feb 17, 2015)
As client’s needs, finances and goals change frequently, it is important to have a mortgage product that offers flexibility.
If you or your clients are interested in a TD Canada Trust mortgage, I would love to sit with them to speak to the pros and cons of a collateral mortgage as well as compare them to many other lenders such a Scotiabank and National Bank.
Collateral mortgages can also create challenges when a client is looking change lenders to refinance to improve cash flow as well as obtain additional funding due to the larger lien against the property. (2nd mortgages)
With the Bank Of Canada confirming in a study that, those who switched lenders at renewal or use the services of a mortgage broker, do tend to save more than those who renew with their bank, it is very important that a client does not get restricted when trying to switch lenders at renewal.