When you get a mortgage in Canada, your lender registers a charge against your property at the land titles office. There are two types of charge registration: conventional (standard charge) and collateral. This distinction has significant implications for your flexibility, especially when it comes to switching lenders or accessing home equity — but most borrowers are never clearly told which type they're getting.
What Is a Conventional (Standard Charge) Mortgage?
A conventional mortgage is registered for exactly the amount you borrowed. If you borrow $500,000, a $500,000 charge is registered against your property. When you want to switch lenders at renewal, the new lender can take over this charge through an assignment — a straightforward, low-cost process.
Conventional mortgages are offered by most monoline lenders and some banks. They give you maximum flexibility because switching lenders at renewal requires minimal legal work and cost.
What Is a Collateral Charge Mortgage?
A collateral mortgage is registered for more than the amount you borrowed — typically up to 100-125% of your property's appraised value. If you borrow $500,000 on a $700,000 home, a collateral charge might be registered for $700,000 or even $875,000.
The logic is flexibility: the lender can advance you additional funds in the future (as a HELOC or additional loan) without re-registering a new charge. TD Bank, Tangerine, and National Bank register all their mortgages as collateral charges by default.
Collateral vs. Conventional: Side-by-Side
| Feature | Conventional Charge | Collateral Charge |
|---|---|---|
| Registered amount | Exactly what you borrowed | Up to 100-125% of home value |
| Switching lenders at renewal | Free or low-cost assignment | Requires discharge + re-registration ($1,000-$2,000) |
| Accessing extra equity later | Need new registration (legal fees) | Easy — already registered for higher amount |
| Portability | Standard | Standard |
| Lenders offering | Most monolines, some banks | TD, Tangerine, National Bank (default) |
| Bundled products (HELOC) | Separate registration needed | Often bundled automatically |
The Hidden Switching Cost
One of the most significant advantages of a conventional mortgage is the ability to switch lenders at renewal for free (or for a small administrative fee absorbed by the new lender). Because the charge can simply be assigned, no lawyer or notary is needed.
With a collateral mortgage, switching always requires:
- Discharge of the existing collateral charge (paid to your current lender — $300-$400)
- New charge registration (legal/notary fees — $700-$1,500+)
- Possible appraisal ($300-$500)
Total: $1,000-$2,000+ just to shop for a better rate at renewal. This switching cost effectively gives your current lender leverage to offer you a less competitive renewal rate, knowing you face friction to leave.
Readvanceable Mortgages and Collateral Charges
Many collateral charge mortgages are paired with a Home Equity Line of Credit (HELOC) to create a readvanceable mortgage product. As you pay down your mortgage principal, the available HELOC room increases automatically. Popular products include:
- TD All-In-One: Combines mortgage + HELOC under one collateral charge
- Scotia Total Equity Plan: Registered as collateral, bundles multiple credit products
- BMO Homeowner ReadiLine: Similar bundled structure
- RBC Homeline Plan: Collateral charge with HELOC component
If you plan to leverage your home equity for investment, renovation, or other purposes as you pay down your mortgage, a collateral/readvanceable structure may be genuinely advantageous. If you simply want a straightforward mortgage and maximum renewal flexibility, a conventional charge is typically better.
Which Should You Choose?
Choose a conventional charge mortgage if:
- You value the ability to switch lenders freely at renewal
- You don't plan to access home equity via HELOC
- You want to maintain competitive leverage at renewal
- You're working with a monoline lender through a broker
Consider a collateral charge mortgage if:
- You want a bundled HELOC + mortgage product
- You plan to use home equity for investment or major renovations
- You intend to stay with the same lender long-term
- The lender's rate is competitive enough to offset switching friction
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Not without paying out your mortgage in full, discharging the collateral charge, and registering a new conventional charge at another lender. This is essentially refinancing, which may trigger penalties if done before term end.
Not inherently — it depends on your situation. It's bad if you want flexibility to switch lenders at renewal. It can be good if you want a bundled HELOC or plan to stay with the same lender and access equity over time.
TD Bank and Tangerine register all mortgages as collateral charges. National Bank also uses collateral charges for most products. Most monoline lenders use conventional charges.
The charge itself doesn't directly affect credit scores, but if it's bundled with a HELOC, that revolving credit limit appears on your credit bureau and can impact your debt-service ratios for future borrowing.