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Differences between collateral and standard charge mortgages you need to know
July 6, 2016
There are two different methods of securing a mortgage that I’m going to touch on today because honestly, I have spoken with too many clients who were totally unaware of the effects each method have on a mortgage loan.
Here is the thing about borrowing; not one single option available is bad, though looking at your personal financial needs and goals, there are options that can benefit you personally more than others.
The two different charge methods included in either fixed or variable mortgage loans are a standard (traditional) mortgage and a collateral charge. Of course they both have pros and cons, but I want to make clear that they will affect you, should the need for refinancing or paying out the mortgage arise.
Although it may seem pre-emptive, preparing for your future through the financial decisions you make today will help protect you in unpredictable situations.
Did you know a standard mortgage gives you the ability to switch to a new lender much easier than a collateral mortgage and gives you more lender options? Whereas, a collateral mortgage allows for the borrower to increase the loan amount without having to first pay off and close the initial loan amount?
Refinancing can become problematic to say the least when these charge methods are not reviewed closely.
Perhaps you have already entered into your agreement, and are wondering if refinancing is even possible if you’re under a standard mortgage or a collateral charge mortgage. Although there may be legal fees involved, I am confident that $1000-$1500 in fees is a far cry from payout penalties should you not be able to re-qualify with that lender that has you in a collateral charge. Having been in the industry for 11 years now, I have access to some of the best support, and encourage you not to give up before you call for some advice.
It might be confusing to decide whether standard or collateral charge is better, or where to go if you’ve engaged in your mortgage and don’t know how to proceed from here. Call me today to discuss your financial goals, and we can find the personal best fit for you.