Many Canadians don’t know whether their mortgage is registered as a collateral charge or a conventional (standard) charge, and the difference can add $1,000 or more to the cost of switching lenders at renewal. TD, Tangerine and National Bank register collateral charges by default (often up to 125% of the home’s value), which makes borrowing more later easier but makes leaving the lender harder. The registration type is set when you sign, so it is worth asking about before closing. This page is part of our guide to mortgage types and features.
A note on terms: “conventional” here means a standard charge registered for the exact loan amount. The same word also describes a mortgage with 20% or more down, a different meaning covered in what a conventional mortgage is.
Collateral vs Conventional Mortgage
| Feature | Collateral charge | Conventional (standard) charge |
|---|---|---|
| Registration | Loan against property (up to 125%) | Specific mortgage amount |
| Adding funds | Easier (no re-registration) | Requires new registration |
| Switching lenders | More expensive | Lower cost transfer |
| Transfer at renewal | Must discharge and re-register | Can be assigned to the new lender |
| Second mortgage | Usually hard to arrange | Available from other lenders |
| Used by | TD, Tangerine, National Bank | Most other lenders |
How Each Type Works
Conventional (standard) charge
| Feature | Details |
|---|---|
| Registration | Exact mortgage amount registered |
| Example | $400,000 mortgage = $400,000 registered |
| At renewal | Can transfer to new lender (assignment) |
| Adding a HELOC | Separate registration needed |
| Second mortgage | Another lender can register behind the first |
Collateral charge
| Feature | Details |
|---|---|
| Registration | Higher amount (often 125% of value) |
| Example | $500,000 home = up to $625,000 registered |
| At renewal | Must fully discharge and re-register |
| Adding a HELOC | May be included in the same registration |
| Second mortgage | Usually not possible (no room in registration) |
Cost Comparison: Switching Lenders
Conventional (standard) charge
| Cost | Amount |
|---|---|
| Assignment fee | $200-400 |
| Legal/admin | Minimal |
| Total | $200-400 |
Collateral charge
| Cost | Amount |
|---|---|
| Discharge fee | $200-400 |
| New registration | $300-500 |
| Legal fees | $500-1,000 |
| Total | $1,000-1,900 |
Actual costs depend on the lenders and the province. The full process of moving a mortgage at maturity is in switching mortgage lenders.
Who Uses Which Type
Collateral charge lenders
| Lender | Default Registration |
|---|---|
| TD Bank | Collateral (TD Home Equity FlexLine) |
| Tangerine | Collateral |
| National Bank | Collateral |
| Some credit unions | Varies |
Conventional (standard) charge lenders
| Lender | Default Registration |
|---|---|
| RBC | Conventional |
| Scotiabank | Conventional (STEP is collateral) |
| BMO | Conventional |
| CIBC | Conventional |
| Most monolines | Conventional |
Advantages of a Collateral Charge
Easier Access to Equity
| Benefit | Details |
|---|---|
| Borrow more later | Without new registration |
| Built-in HELOC potential | May be included |
| Lower cost to add funds | No legal fees |
| Readvanceable | Credit becomes available as you pay down the mortgage |
Example: Future Borrowing
| Scenario | Collateral | Conventional |
|---|---|---|
| Existing mortgage | $300,000 | $300,000 |
| Want a $50,000 HELOC later | Request from lender (no registration cost) | New registration ($500-1,000) |
Disadvantages of a Collateral Charge
Switching Costs
| Impact | Details |
|---|---|
| Renewal negotiation | Less leverage |
| Harder to transfer | Higher costs discourage switching |
| The lender knows this | Its renewal offer may be less competitive |
Limited Secondary Financing
| Impact | Details |
|---|---|
| Second mortgage | Hard to get |
| Other HELOCs | Registration is full |
| Investment loans | May be blocked |
Example: Second Mortgage Blocked
| Situation | Collateral | Conventional |
|---|---|---|
| Home value | $700,000 | $700,000 |
| First mortgage | $400,000 | $400,000 |
| Registered amount | $875,000 (125%) | $400,000 |
| Room for second mortgage | None | $160,000 (80% LTV minus mortgage) |
Collateral Charges and Readvanceable Mortgages
Readvanceable products (a mortgage and a line of credit under one registration, where the credit limit grows as the mortgage is paid down) are registered as collateral charges, because the registration has to cover more than the starting balance. How the credit line grows, the products on offer and who they suit are covered in readvanceable mortgages.
Weighing the Trade-off
Collateral tends to suit:
| Situation | Why |
|---|---|
| Plan to stay with the lender long-term | Switching cost matters less |
| Want easy access to equity | Avoids re-registration costs |
| Will use readvanceable features | Flexibility has value |
| TD, Tangerine or National Bank offers the best rate | The rate saving may outweigh the switching cost |
Conventional tends to suit:
| Situation | Why |
|---|---|
| Shop rates at each renewal | Easy transfer |
| May need a second mortgage | Keeps options open |
| Unsure about staying with the lender | Lower switching costs |
If You Already Have a Collateral Mortgage
At Renewal
| Approach | What it involves |
|---|---|
| Get competing quotes | Show them to your lender |
| Negotiate with the quotes | The lender knows your switching cost, and so do you |
| Calculate break-even | Is switching worth the cost? |
| Stay | If the renewal rate is competitive |
Break-Even Calculation
| Factor | Amount |
|---|---|
| Switching cost | $1,500 |
| Mortgage amount | $300,000 |
| Rate saving | 0.1% a year = $300 |
| Years to break even | 5 years |
In this example a saving of more than 0.1% a year recovers the $1,500 cost within a five-year term. Broader renewal steps are in the mortgage renewal guide.
Questions to Ask Your Lender
| Question | Why It Matters |
|---|---|
| Is this a collateral or conventional charge? | Know your registration type |
| What amount will be registered? | Understand the collateral amount |
| What are the discharge costs? | Know switching costs |
| Can I get a second mortgage later? | Future flexibility |
| Is this a readvanceable mortgage? | Understand the structure |