You’ve seen the ads… That fellow with the Dutch accent and the orange background, telling us to ‘save your money’. Since 1997, when they first entered Canada, they have grown to 1.7 million clients and $37billion in assets. ING spends millions in marketing… They’ve created a brand that is synonymous with saving or discounts.
Today, I just heard they will be counting on that trust. It is rumoured ING Direct will begin registering ALL mortgages as collateral charges. They join TD Bank as the second major lender to make this bold change. A move that has great implications for the Canadian consumer.
It was almost one year ago when TD Bank announced they would register all their mortgages as a collateral charge. (click here for the details of what a collateral mortgage is and some reactions). Consumer advocates spoke up and warned against getting a mortgage like this…. Strangely, the media was silent. (hmm, I wonder how much TD spends in media advertising???).
In short, the benefit is that you will be able to increase your mortgage without having to spend money on new legal fees….ok, that saves you around $800 to $1,000. That’s your benefit. (but even this has changed as there are some programs that will offer a discounted legal fee).
Here’s what you lose….you give up your leverage to negotiate the best rate… and that’s because if you want to leave ING, you cannot simply transfer your mortgage… Collateral mortgages cannot be transferred. You still have to qualify for any increase… you must trust that the Bank has your best interest at heart…. Hey, remember when all the banks raised their lines of credit rates in 2008-09 without warning?
ING has been a great Lender, but this new move will drive away most advisors, mortgage brokers and clients that want options and flexibility..
I’ll continue to report more as this story breaks..