ING made it official and announced that all new mortgage applications submitted on or after December 10 2011, will be registered as a Collateral Charge. Here’s a copy of the circular that was released….click here.
They join TD Canada Trust as just the second major lender to take this step and put the hand-cuffs on unsuspecting borrowers. What’s different about ING’s move is that at renewal time, unlike TD, they will re-register a new collateral mortgage charge, at ING’s expense. Strangely, I haven’t seen any major media coverage on this subject. hmm, does this have anything to do with ING being the largest bank in the world??
SAY GOOD-BYE TO THE ‘UNMORTGAGE’ HELLO ‘MORTGAGE FOR LIFE’
But why should you care? And what does it matter? Well, this is about a few things. CHOICE… they aren’t giving you one. A collateral charge is normally used for loans and lines of credit. There is no amortization. And while that might be good for some, it’s not always good for all. ING says you can refinance without having to incur new legal fees… yes, that’s true..however, you still have to be re-approved for any increase and negotiate your rate. And the truth is, ING, just like all banks, doesn’t always have the lowest mortgage rates….don’t get fooled by their slick marketing ads…
FUTURE OPTIONS. It’s also about your future options… when it comes time to renew, and you want to switch your mortgage to another lender, you can’t… Collateral mortgages are NOT transferable.. you will have to deal with new legal fees… and ING knows this… so do you think they have to offer you the best rate at renewal time?
And speaking of the future, let’s look at a real possible scenario…suppose you need some money in a few years.. You have a great mortgage rate with ING.. it’s 3.64%… or it’s Variable Prime less 0.75%…. and now you don’t qualify for a mortgage increase. With a conventional mortgage, you could always seek out a 2nd mortgage, but now you can’t… No 2nd mortgage lender will register behind a collateral charge. You’re stuck with having to refinance the entire mortgage. You lose, The Bank wins.
For me, ING and TD Canada Trust are not the first choice for mortgage lenders…