Personal Finance

Switching TD collteral mortgage to Credit Union?

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  • Jun 5th, 2018 9:20 am
[OP]
Penalty Box
Apr 18, 2013
3871 posts
2151 upvotes
Canada

Switching TD collteral mortgage to Credit Union?

My current mortgage is with TD as a collateral mortgage. It is up for renewal in a few months. I was at a local credit union today opening a high interest savings account, and asked about their mortgages. Their rates are slightly better than TD's and they offer conventional and collateral mortgages (both with the same rates) so the choice is up to the client. I also asked about whether they will pay any fees associated with switch my mortgage to them, and they said they will pay up to $800, which I think would cover most, if not all of the costs of getting out of the TD collateral mortgage. They said they deal with an in house title company that specializes in these types of things (i.e. titles and collateral mortgages).

I'm thinking it is a no-brainer to go with the credit union when I'm up for renewal in a few months. Any downsides you can see?
15 replies
Deal Fanatic
Nov 22, 2015
6823 posts
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gbill2004 wrote: My current mortgage is with TD as a collateral mortgage. It is up for renewal in a few months. I was at a local credit union today opening a high interest savings account, and asked about their mortgages. Their rates are slightly better than TD's and they offer conventional and collateral mortgages (both with the same rates) so the choice is up to the client. I also asked about whether they will pay any fees associated with switch my mortgage to them, and they said they will pay up to $800, which I think would cover most, if not all of the costs of getting out of the TD collateral mortgage. They said they deal with an in house title company that specializes in these types of things (i.e. titles and collateral mortgages).

I'm thinking it is a no-brainer to go with the credit union when I'm up for renewal in a few months. Any downsides you can see?
$800 is just enough to cover legal fees and appraisal thru the credit union.... There's probably nothing left to cover TD's discharge fee.
[OP]
Penalty Box
Apr 18, 2013
3871 posts
2151 upvotes
Canada
superfresh89 wrote: $800 is just enough to cover legal fees and appraisal thru the credit union.... There's probably nothing left to cover TD's discharge fee.
Would the $800 cover getting out of the collateral mortgage portion though? I'm not too worried about the TD discharge fee...I think that's only around $200.
Deal Fanatic
Nov 22, 2015
6823 posts
6976 upvotes
gbill2004 wrote: Would the $800 cover getting out of the collateral mortgage portion though? I'm not too worried about the TD discharge fee...I think that's only around $200.
Legal fees: ~$550
Appraisal: ~$250
Collateral discharge: ~$500
[OP]
Penalty Box
Apr 18, 2013
3871 posts
2151 upvotes
Canada
superfresh89 wrote: Legal fees: ~$550
Appraisal: ~$250
Collateral discharge: ~$500
But doesn't the "legal fees" also take care of the collateral discharge? How is the collateral discharge portion different from a regular "discharge" of which I believe TD charges $260?
Deal Fanatic
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May 11, 2014
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Rankin Inlet, NU
Also see if the credit union has a dividend/patronage refund program. While not significant, it may factor further for going through with switching out of TD. A 6-figure mortgage can still give you $100-200 cashback a year with some credit unions.
Support your local Credit Union!

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Deal Fanatic
Nov 22, 2015
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gbill2004 wrote: But doesn't the "legal fees" also take care of the collateral discharge? How is the collateral discharge portion different from a regular "discharge" of which I believe TD charges $260?
Definitely not. Legal fees are just to setup the charge for the new lender.

Not totally sure about the discharge fee for TD actually... I'd double check with them, it could be just the $260.
[OP]
Penalty Box
Apr 18, 2013
3871 posts
2151 upvotes
Canada
superfresh89 wrote: Definitely not. Legal fees are just to setup the charge for the new lender.

Not totally sure about the discharge fee for TD actually... I'd double check with them, it could be just the $260.
Hmmm...when I asked at the credit union about the fees to get out of the TD collateral mortgage, they thought it could be covered by their in house legal/titles team and fall within the $800. But perhaps they didn't realize the extra cost associated with a collateral mortgage.
Deal Fanatic
Nov 22, 2015
6823 posts
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gbill2004 wrote: Hmmm...when I asked at the credit union about the fees to get out of the TD collateral mortgage, they thought it could be covered by their in house legal/titles team and fall within the $800. But perhaps they didn't realize the extra cost associated with a collateral mortgage.
This. Legal fees would certainly cover the transfer of a standard mortgage charge as they are eligible for transfer. The problem with the collateral mtg is that it cannot be transferred, only discharged by the original lender.
[OP]
Penalty Box
Apr 18, 2013
3871 posts
2151 upvotes
Canada
superfresh89 wrote: This. Legal fees would certainly cover the transfer of a standard mortgage charge as they are eligible for transfer. The problem with the collateral mtg is that it cannot be transferred, only discharged by the original lender.
I was very clear in my question so I'd assume they'd know the costs associated with discharging a collateral mortgage. But maybe not. I'll have to set up a more formal appointment then it looks like...
Banned
Sep 19, 2012
1253 posts
1867 upvotes
Calgary
superfresh89 wrote: This. Legal fees would certainly cover the transfer of a standard mortgage charge as they are eligible for transfer. The problem with the collateral mtg is that it cannot be transferred, only discharged by the original lender.
This is a common misconception - a collateral charge can be transferred from one lender to another. Our credit union does it and so does MCAP. There is no requirement to discharge and register a new lien. In fact, from land titles perspective, a “collateral charge” is not special. The only difference is what the lien secures: a collateral charge secures all debt with the lender and a standard charge secures only the mortgage loan.
Nikola Alaica, CPA, CA | Tax, Accounting, Mortgages
Newbie
Feb 24, 2017
59 posts
17 upvotes
ahlaker wrote: This is a common misconception - a collateral charge can be transferred from one lender to another. Our credit union does it and so does MCAP. There is no requirement to discharge and register a new lien. In fact, from land titles perspective, a “collateral charge” is not special. The only difference is what the lien secures: a collateral charge secures all debt with the lender and a standard charge secures only the mortgage loan.
I found lots of sources that say the opposite. Google: https://www.google.ca/search?q=collater ... ransferred

Here's one discussion on RFD with fee breakdown:
http://forums.redflagdeals.com/today-i- ... #p24383585
Banned
Sep 19, 2012
1253 posts
1867 upvotes
Calgary
wadesj wrote: I found lots of sources that say the opposite. Google: https://www.google.ca/search?q=collater ... ransferred
Here's one discussion on RFD with fee breakdown:
http://forums.redflagdeals.com/today-i- ... #p24383585
I have previously posted about this issue. Have a look:
ahlaker wrote: A collateral charge is certainly transferable. Some people may/will mock me for pointing this out all the time, but there is plenty of misinformation floating around collateral charges (someone once said we should sticky "collateral charges" -- I second that vote!). Here are two links for reference:

https://www.canada.ca/en/financial-cons ... tgage.html says "you will likely need to discharge your existing mortgage and register a new mortgage with the new lender"

http://www.cba.ca/information-on-mortgage-security says "with collateral charge mortgages, it is less likely, but still possible, that a new lender will accept a transfer of a collateral charge mortgage"
A collateral charge can legally be switched. I've personally done it before. Whether your incoming institution wants to or not is a different story. MCAP is one of the "mainstream" lenders that will now accept collateral charges as part of it's "switch" program.
Nikola Alaica, CPA, CA | Tax, Accounting, Mortgages
Newbie
Feb 24, 2017
59 posts
17 upvotes
ahlaker wrote: I have previously posted about this issue. Have a look:



A collateral charge can legally be switched. I've personally done it before. Whether your incoming institution wants to or not is a different story. MCAP is one of the "mainstream" lenders that will now accept collateral charges as part of it's "switch" program.
Thanks for the info! :)
[OP]
Penalty Box
Apr 18, 2013
3871 posts
2151 upvotes
Canada
Are TD variable mortgages charged as collateral mortgages?
Deal Fanatic
Nov 24, 2013
6280 posts
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Kingston, ON
gbill2004 wrote: Are TD variable mortgages charged as collateral mortgages?
Yes.

Every new mortgage issued by TD since ~2009 or so is collateral. It's possible if you switched a standard charge mortgage to TD at some point or have been renewing a 10 year old mortgage that you could theoretically have a mortgage with TD that's not collateral, but if it's new in the last 10 years, it probably is.

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