In a follow-up to an original segment about collateral charge mortgages at TD Bank – which resulted in the major banks promising
to be more up-front about the stipulations associated with these types of mortgages -- CBC went undercover to two different TD branches to see how well its mortgage specialists explain the fine print and to “test” the bank’s promises.
At the first branch, the undercover journalist asked the specialist if there was any difference between a TD mortgage – which includes a collateral charge -- and one offered at other banks. The specialist failed to mention anything about collateral charges.
“I’ll be perfectly candid with you, most of the banks that you’ll go into, the sort of terms and rates and everything are going to be pretty similar,” the bank employee said.
And in a follow-up, the reporter asked if it is easy to move the mortgage to another lender once the original term was up.
“It is, but I don’t know if it actually advantages you if you’re constantly shopping around on rates you’re losing out on sort of the substance of the relationship, and that’s what really improves on things,” the bank employee said.
At a second branch, the specialist was asked to explain collateral charge mortgages.
“TD has a charge, a registered charge on your property. So that’s what the mortgage is tied against is the home. So if we lend you money that’s what the charge is,” a second employee said. “It’s a charge, right, it’s technically collateral, so the bank has that collateral on your … property. And that’s why we’re able to … lend off low interest rates.”
Collateral charge mortgages have earned the ire of brokers and clients when it comes to requalifying
and porting mortgages.
However, some brokers have pointed to the positives
of collateral charge mortgages as well.
To view the CBC’s entire segment, click here
CBC’s Marketplace went undercover to one big bank to see how transparent it was about collateral mortgages and the fine print associated with them.