Christine Buemann Mortgage Broker

What are collateral mortgages and what is the differentiates them from a regular mortgage? CBC’s Marketplace recently did a story on how TD only offers collateral mortgages and this has sparked a lot of conversation about the topic. The main difference is how they are registered. When you receive a conventional mortgage, it is registered on title for the actual amount of the mortgage . A collateral loan is registered for higher amount, usually for the purchase price amount. The advantage to having the higher amount registered is that you are able to access the funds easier should you choose to refinance before the term is up. You would have to qualify for the increase in funds, but you would generally avoid paying legal fees for the transaction. There are several disadvantages but the largest one is how many people feel “trapped”. Most lenders will not accept transfers in upon renewals from collateral loans so you are usually stuck with that lender until you are able to refinan

Tip#1 – What value will the lender consider? One thing that is often overlooked when people are buying rural property is that most lenders will only consider the value of the house plus the first 5-10 acres when financing a property. That excludes outbuildings, however a garage is allowed and can be attached or detached. Most major banks will only consider the first 5 acres, however CMHC will consider up to 10 and we have numerous lenders who will as well. If the lender or the insurer questions the value, then they will generally order an appraisal.   With the recent changes that took effect for most banks on November 1st, 2012, we have seen a drastic increase in the amount of appraisals being ordered. If the appraisal comes in lower than the purchase price, there are several options: ·          consider putting more than 20% down to avoid the insurers (CMHC, Genworth, CG) ·          You may still have to go through a credit union as they are generally more flexible with

There can be a lot of confusion around the different types of insurance when purchasing home. Here is a quick overview:   Default insurance: This is provided through CMHC, Genworth or Canada Guaranty. It is required for purchases with less than 20% for down payment. It is a percentage based on several variables but mainly your down payment amount, down payment source and amortization. It is generally just added into your mortgage at origination.   Home insurance: Otherwise known as Homeowner’s insurance. It is a type of property insurance that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of its use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory. It is required for anyone who is obtaining a mortgage.   Life insurance: A contra