Collateral Mortgage
Canadian mortgage term definition with formula, examples, and limits used by mortgage brokers.
Definition
A mortgage registered as a collateral charge rather than a standard charge. Can be registered for more than the mortgage amount (up to 125% of value). Cannot be transferred to another lender without refinancing — requires discharge and re-registration.
Example
TD and CIBC register all mortgages as collateral charges. Cannot "switch" to First National at renewal — must pay discharge fees and legal costs.
Related Terms
GDSMonthly housing costs divided by gross monthly income. Includes mortgage payment, property tax, heating, and 50% of condo fees.TDSAll monthly debt payments divided by gross monthly income. Includes housing costs plus credit cards, car loans, lines of credit, and other debts.LTVTotal mortgage debt divided by property value. Determines if CMHC insurance is required and which lenders qualify.CMHC InsuranceMandatory mortgage default insurance required when down payment is less than 20% (LTV > 80%). Enables up to 95% LTV financing.Stress TestBorrowers must qualify at a higher interest rate to ensure affordability if rates rise. Calculated as the maximum of contract rate + 2% or 5.25%.
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