To watch the interview please click here…
For those considering a TD Canada Trust mortgage, take note.
TD Canada Trust made a sweeping change to their mortgage lending effective October 18th, 2010. They are no longer registering mortgage via a standard legal charge and will only accept a collateral charge. This is very important as it relates to how your mortgage is legally registered and takes away the flexibility to the client once you have your mortgage at TDCT. I spoke with Global news on this issue and feel that consumers should be aware of the changes that may affect them.
TDCT’s reasoning behind this is that they will feel that this will benefit the client who wishes to refinance mid term of their mortgage and not incur legal costs for that future transaction. For the consumer it is very important that you understand all the pros and cons of this mortgage before committing to it. The bottom line is that this is not giving consumers a choice, it is one option.
Due to the fact that most lenders use a standard legal charge for mortgages, they can easily be transferred from one financial institution to another without incurring legal fees. Why would you transfer? For a better deal and rate from another lender at maturity or mid term. If your mortgage is now a collateral mortgage at TDCT and you want to switch it to another lender, you will be stuck with additional costs for legal fees and perhaps appraisal costs as well. These costs may run anywhere from $1,000 to $1,500. For most Canadians we prefer to have choice, choice in where we do business and having the opportunity to do business with whom we choose – this new change will limit your ability to do that. This may be a suitable mortgage for some consumers, just know be aware of the details.
Ask the questions, make sure you understand the mortgage you are agreeing to. If the answer is unclear get a 2nd opinion, here are a few questions to ask TDCT when setting up your mortgage with them:
1. Find out if it has all the features such as assumable, portable and the prepayment privileges.
2. Ask how the mortgage interested is compounded as the stated rate is not the same as the effective rate. A lender can tell you that they are offering best rate but if the interest is compounded monthly instead of semi-monthly then your overall interest cost is higher. You may not be comparing apples to apples.
3. Ask if you want to transfer to another financial institution that has a standard charge mortgage if you will be charged legal fees to get out of their mortgage. The answer will be yes as you can’t transfer a collateral charge to a standard charge.
Please feel free to contact us for more information on this important change. Keep in mind that it does not affect mortgage closed prior to Oct. 18th but only those on a going forward basis.
Kim Gibbons, ” Your Mortgage Superhero ®”
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