Collateral Charge Mortgages: What to Know Before You Sign

Every mortgage is registered on your home's title, and whether it goes on as a standard charge or a collateral charge affects how easily you can borrow more later and how easily you can move to another lender. Here is how the two work in BC, which lenders use which, and what to ask before you sign.

The short version

What goes on your title

When you borrow against a home in BC, your mortgage is registered as a charge against the title at the land title office, run by the Land Title and Survey Authority (LTSA). A title search lists it along with any other charges, liens and interests on the property. What the registration says depends on the type of charge:

• A standard charge, also called a conventional charge, is registered for the amount of your mortgage, and the registered document includes its main terms, such as the amount, term and interest rate. It secures only that mortgage.
• A collateral charge secures one or more loans and may be registered for up to the full value of your home, or more. The terms of your loan sit in a separate credit agreement, and the registered interest rate can be higher than the rate you pay. TD's collateral mortgage documents for BC, for example, say that although the bank is secured for a higher rate, it is entitled only to interest at the rate in your credit agreement.

Registering more than you owe is about flexibility: the lender's security is already in place if you want to borrow again.

Which lenders use which

Practices differ by lender and by product. Some examples from lenders' own pages and documents:

• CIBC: standard charges for its fixed-rate, variable-rate and convertible mortgages, registered for the exact amount you borrow; collateral charges for its Home Power Mortgage and Home Power Plan, typically registered for up to 100% of the property's value.
• Scotiabank: both. A conventional charge is registered in favour of Scotia Mortgage Corporation and secures only the mortgage; a collateral charge is registered in favour of The Bank of Nova Scotia and may secure other debt.
• RBC: both. Its traditional mortgages are generally registered for the actual loan amount, and its collateral mortgages may be registered for up to the full value of the home. RBC says it is your choice whether a collateral mortgage is registered for the amount you intend to borrow or a higher amount.
• Manulife Bank: its guide for borrowers says the mortgage will be registered as a collateral charge.

Plans that combine a mortgage with a home equity line of credit generally use a collateral charge, because the line can be drawn, repaid and drawn again. With these plans, you can typically borrow up to 80% of your home's value in total, with no more than 65% as a revolving line of credit.

The advantage: borrowing again

With a standard charge, borrowing more generally means paying to discharge the existing charge and register a new one for the higher amount. With a collateral charge registered for enough, you may be able to borrow more without registering a new charge or paying the legal and other fees that come with it, as long as you qualify for the extra money. You pay interest only on what you actually borrow, not on the registered amount.

An example with round figures: you buy an $800,000 home with a $640,000 mortgage. A standard charge would be registered for $640,000, while a collateral charge might be registered for $800,000 or more. Years later, with the balance down to $500,000 and the home's value unchanged, a combined plan capped at 80% of value could let you borrow up to $140,000 more without a new registration, if you qualify.

The drawbacks

• Switching lenders costs more. CIBC says most lenders will accept a transfer or assignment of a standard charge, which is often simpler and less costly. With a collateral charge, it says many new lenders won't accept a transfer, so you pay to discharge the old charge and register a new one with the new lender.
• Other debts come along. A collateral charge may secure other debts you owe the same lender. RBC gives car loans as an example of other borrowing a collateral mortgage can secure. Before you can switch or discharge it, you have to repay, or move to the new lender, every loan the charge secures.
• Easy credit. The Financial Consumer Agency of Canada (FCAC) warns that easy access to funds through a home equity line of credit may tempt you to take on more debt than you can pay back, and that if you don't repay it, you could lose your home.
• Combined plans and the stress test. Since November 2024, an uninsured mortgage can generally move from one federally regulated lender to another at renewal without the stress test, if the loan amount and amortization don't increase. The Office of the Superintendent of Financial Institutions (OSFI) applies that to stand-alone mortgages, with a standard or a collateral charge, but not to loans within combined plans or loans that can be re-borrowed, so moving a combined plan can mean qualifying again.

If you switch lenders later

At the end of your term, you can leave without a prepayment penalty, but moving a collateral charge usually involves:

• A lawyer or notary to register the new mortgage and make sure the old one is discharged. FCAC puts professional fees for a discharge at typically $400 to $2,500.
• Land title office fees. Since April 1, 2026, LTSA has charged $83.82 to register a mortgage and $33.53 to register a discharge.
• Your current lender's discharge fee. Banks and other federally regulated lenders must disclose it in your mortgage contract.
• Possibly an appraisal to confirm your home's value.

The new lender may cover some or all of these costs, so ask before you commit. If you switch partway through a term, you may also owe a prepayment penalty. My guide to renewing your mortgage covers the timing.

How to tell which kind you have

• Your documents. In 2014, Canada's major banks committed to give mortgage shoppers information comparing collateral and standard charges, including details on their own mortgage at or before signing. A collateral charge also comes with a separate credit agreement for the loan itself.
• The registered amount. A standard charge is registered for the amount you borrowed. If the registered amount is well above your original mortgage, it is likely a collateral charge.
• The title. A title search lists the mortgage and its registration number, and you can order a copy of the registered document with that number, through an LTSA Explorer account or a registry agent, for a fee.
• The lender's name. At Scotiabank, for example, a collateral charge is in favour of The Bank of Nova Scotia and a conventional charge is in favour of Scotia Mortgage Corporation.
• Ask. FCAC suggests asking your lender, lawyer or notary, and allowing a few months before your renewal date if you plan to switch.

Questions to ask before you sign

• Is this a standard or a collateral charge? And does the lender offer the other kind for this product?
• What amount will it be registered for? Some lenders let you choose between the amount you are borrowing and a higher one.
• What will it secure? Only this mortgage, or other borrowing with the lender too, now or later?
• What would it cost to leave? Ask about the discharge fee and whether other lenders will accept a transfer of this charge.
• Do I need the flexibility? If you expect to renovate or want a line of credit, a collateral charge may save you legal costs later. If you plan to shop around at every renewal, a standard charge may be simpler.

Questions buyers often ask me

Is a collateral charge mortgage a bad idea?

Not necessarily. It makes borrowing again cheaper and simpler, but it usually makes moving to another lender more expensive, so it depends on your plans.

Can I switch lenders at renewal if I have a collateral charge?

Yes, but many lenders won't accept a transfer of a collateral charge, so you would usually pay to discharge it and register a new mortgage, and repay or transfer any other loans it secures. The new lender may cover some or all of the costs. If your mortgage is part of a combined plan, you may also have to pass the stress test again.

Do I pay interest on the full registered amount?

No. You pay interest only on what you borrow, at the rate in your credit agreement, even if the charge is registered for more.

How can I find out which kind of charge my mortgage has?

Check your mortgage documents, or ask your lender, lawyer or notary. A copy of the registered mortgage, which you can order through LTSA, shows the amount it was registered for.

Can a collateral charge secure my other debts?

It can. A collateral charge may secure other loans with the same lender, such as a line of credit or a car loan, and you would have to repay or transfer them before you could discharge it or switch lenders.

Planning your financing? Read Closing Costs in BC and Reverse Mortgages and Home Equity in Retirement, or try my mortgage calculator.

This article is general information, not financial or legal advice. Lender practices come from their own websites and documents, and fees and rules were current at the time of writing, so ask your lender, lawyer or notary about your own mortgage. For the federal guide, see choosing a mortgage.