More and more lenders are shifting to collateral charge mortgages, so it is extremely important to know the differences between a standard charge mortgage and collateral charge mortgage.
So which option is better for you? Both have their pros and cons so it all boils down to your needs and preferences. It is vital to understand the difference between the two so you can secure the mortgage that suits your future needs best.
Collateral Mortgage Charge
With collateral mortgage charge, your mortgage will be registered for up to 100% or 125% of the home value, which allows you to access your equity easily for debt consolidation, home renovation or to make new investments because you are not required to pay legal fees or to navigate a complicated legal process.
It may influence your negotiating power with the lender at the time of renewal. With collateral mortgage charge, it is even more difficult to change lenders without incurring legal fees.
Additionally, it might be hard to obtain another mortgage unless the value of your home increases considerably.
Standard Mortgage Charge
Standard charge is suitable for anyone who won’t need to refinance a home loan during the mortgage term.
It also gives you the ability to change lenders easily and affordably at the time of renewal without incurring legal fees. Simply put, this gives you more options. If you want to borrow more, you can get a second mortgage or even line of credit (both private and institutional) with a standard charge.
However, it requires the services of a solicitor (who basically evaluates your mortgage contract as an important step necessary to close the mortgage transaction).
Choosing between a regular standard charge mortgage and a collateral charge mortgage can be a complicated process for many homeowners and homebuyers. Getting proper advice from a reliable mortgage broker who deals strictly with mortgage and a wide range of lenders is a great way to navigate this tricky issue. A mortgage broker will help make sure that the decision you make is right for your specific needs and situation.
To help you find the best mortgage that suit your needs contact our Collingwood Mortgage Brokers Specialist to start your application today.