Collateral Mortgages

As the second biggest country in the world—behind Russia—there are many different sorts of people taking out mortgages in Canada. Some are looking to settle down with a family while others are looking to retire. Regardless of who you are, you will probably require a mortgage to make this move. One option to consider is a collateral mortgage. Collateral mortgages are perfect for people who have confidence that they can pay off their home and are willing to secure their mortgage with collateral. Why do more people not take advantage of collateral mortgages? Many of them aren’t aware that collateral mortgages exist or where to apply for one. Now there is a simple way to apply for a collateral mortgage. This way is Smarter Loans.

We know where to find the best financial companies giving collateral mortgages. What is Smarter Loans? It is a service you can utilize that makes applying for a collateral mortgage as easy as it can possibly be. After working all day, likely on a computer, the last thing you want to do is look through websites when you get home. This web-time can be decreased significantly using Smarter Loans’ directory. This directory is where you will find all the companies you should consider applying to for a collateral mortgage.

This directory is designed to be easy to use. Search it at your leisure, and when you are ready, click “Apply Now” to apply for your collateral mortgage with the provider of your preference. As an alternative way to secure a collateral mortgage, you can also instead click “pre-apply” to assign a devoted member of our team to finding a collateral mortgage lender who is most suitable for you and have them reach out to you with the most suitable offer.

We can help connect you with the top collateral mortgage and other types of mortgage providers in Canada.

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Top Collateral Mortgages Providers in Canada

Company
Amount
Interest Rate
Reviews
Terms
$50,000 and Up
Varies
Varies
$50,000 - Unlimited
Varies
Varies
$50,000 - Unlimited
Varies
Varies
$50,000 - Unlimited
Varies
Varies
$10,000 - $25,000
Varies
12 - 60 months
$50,000 - $100M
Varies
Varies

What is a Collateral Mortgage and How Does it Work?

Mortgages come in a variety of different shapes and sizes. There are open and closed mortgages. Fixed and variable rate mortgages. But one term you might not have heard of is collateral mortgage. (Not to be confused with conventional mortgage.) If you’re unfamiliar with it, don’t be too upset. Collateral mortgages aren’t something most Canadians would discuss around the dinner table. While collateral mortgages can come in handy, they can restrict you as well.

It’s easy to mix up collateral and conventional mortgage. Both begin with the letter C in the alphabet. Although they share some similarities, there are some important differences you’ll want to know. If you’re shopping for a mortgage, you might sign up for a collateral mortgage without even knowing it. (It’s often buried in the fine print in the terms and conditions of your mortgage paperwork.)

Conventional mortgages are pretty straightforward to understand. It’s the mortgage most Canadians take out. A conventional mortgage is when you make a down payment of 20% or more (as opposed to putting down less than 20% and qualifying for a high-ratio mortgage). When you have a conventional mortgage, the amount that’s registered on your mortgage is equal to your mortgage amount. 

For example, if you’re buying a condo for $250,000 and you’re making a 20% down payment ($50,000), you’ll need a $200,000 mortgage to close the deal. However, with a collateral mortgage, it works slightly differently.

A collateral mortgage may register a charge of up to 125% of your property’s value (provided you’re making a 20% down payment). In the same example, with a $250,000 property, the lender could register a maximum charge of $312,500.

You’re probably wondering why a lender would register a charge greater than the property’s value. Because the lender is setting it up in case you later borrow funds from the equity in your home.

Lenders are increasingly offering collateral mortgages these days. Most of the big banks offer collateral mortgages. (In case you’re wondering, the opposite of a collateral mortgage is a standard mortgage where a standard charge is registered instead of a collateral charge.)

Why You Might Choose a Collateral Mortgage

Borrowing money by way of a home equity line of credit is one of the cheapest ways to borrow money outside of a mortgage. A collateral mortgage makes sense if you’re planning to set up a home equity line of credit now or later on.

With a standard mortgage, you may have to refinance your mortgage and pay mortgage penalties, not to mention a higher rate. If you have a collateral mortgage, you may be able to set up a home equity line of credit with your existing lender and mortgage and not pay a costly mortgage penalty.

Collateral mortgages do have their downsides though. It makes it tougher to shop around when your mortgage comes up for renewal. If you aren’t planning to take out a home equity line of credit, you might be better with a standard mortgage.

Pre-Apply For A Collateral Mortgage Here

Additional Articles About Mortgages


Types of Collateral Mortgages offered:

  • First Mortgage
  • Residential Mortgage
  • Second Mortgage
  • Commercial Mortgage
  • Mortgage Refinancing
  • Home Equity Line of Credit
  • Fixed Rate Mortgage
  • Debt Consolidation
  • Variable Rate Mortgage
  • Cashback Mortgage
  • First Time Homebuyers
  • Construction Mortgage
  • Self Employed Mortgages
  • Bridge Financing

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