Monday, October 18, 2010

TD's Collateral Charge

Here is an article I received this morning from Axiom Mortgage Partners regarding a change TD has recently made to the way they register mortgages. This article discusses the pros and cons of the new registration policy:

This week TD is changing the way they register their mortgage charge. As of October 18, 2010 mortgages will now be registered as a collateral charge. TD believes that this will be a positive change for their consumers. I am not certain that I agree. Lets take a quick look at the facts and the pros and cons.

Facts:
Mortgage will be registered as a collateral charge.
Mortgage can be registered in an amount equal to 125% of the value of the property.
Pros
According to TD's information releases:
The flexibility to register the collateral charge for a higher amount than the current loan agreement so that if a customer wants to increase their mortgage in the future they can reuse the existing collateral charge and not incur any new registration fees
The flexibility to switch to another lending product by using the existing collateral charge without incurring registration fees.

Cons:
Well, come maturity a borrower will no longer have the option to "switch" their mortgage to another lender. The charge will have to be discharged in full and a new mortgage placed. This means it makes it much more difficult and costly to move a mortgage at renewal.
Depending on the wording of the collateral agreement, all of a customer's credit facilities at TD may be covered by the charge. This could mean that if a borrower wanted to discharge the mortgage they may also have to pay out other TD credit items such as Visas etc.
Talk to your TD rep to get their take on what this means to you and your clients.
-Axiom Mortgage Partners

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