馃攳
Collateral Mortgages Vs Conventional Mortgages - YouTube
Channel: Nolan Matthias
[0]
hey welcome back it's nola mathias and
[2]
today i want to talk about conventional
[4]
versus collateral mortgage charges this
[5]
is a topic that is often misunderstood
[8]
but it is really simple so what i want
[9]
to do today is give you a simple
[11]
simple simple explanation of how
[13]
collateral and conventional mortgage
[14]
charges work
[15]
but before we get into it doing that
[16]
favor hit that subscribe button hit that
[18]
notification bell
[19]
and please hit that like button so more
[21]
people like you can see that video
[23]
okay so let's get into it let's start
[24]
with conventional mortgage charges
[26]
conventional mortgage charge is really
[27]
simple it is a charge
[29]
or a document that's registered against
[31]
the title of your property
[32]
and it has all the terms and details of
[34]
your mortgage registered right there on
[37]
the title
[37]
so it will have things like your term
[40]
your amortization
[41]
your interest rate and your original
[43]
borrowing amount
[44]
and as you pay down more and more over
[46]
time the amount that you owe the bank
[47]
and the amount that they can claim
[49]
against the title of your property goes
[50]
down accordingly
[52]
based on the payments that you've made
[53]
and the amount of principal that you
[54]
paid down now the pros to having a
[56]
conventional mortgage charge is you only
[57]
ever
[58]
owe the bank what you owe them for the
[59]
mortgage they can't register things like
[61]
your car loan or your credit card or
[63]
line of credit against your property
[65]
the only obligation you have to them is
[66]
for the mortgage
[68]
the other pro and the big one that we
[70]
see all the time is that it is easier to
[72]
move your mortgage from
[73]
one lender to a different lender so if
[75]
you get offered a lower rate elsewhere
[77]
or you just simply decide that you don't
[78]
like the current lender that you're with
[80]
you can do what's called a transfer to
[82]
another lender where basically they
[84]
re-register the mortgage
[86]
on your title to a different lender and
[88]
leave all the original documents
[90]
basically intact so it is very
[91]
easy to do a cheap thing to do and
[94]
something that typically the
[95]
lender that you're moving to will pay
[97]
for now what are the cons of a
[98]
conventional mortgage charge well
[100]
quite simply this it becomes more
[102]
expensive to borrow more money in the
[103]
future
[104]
because if you decide that you want to
[105]
get a home equity line of credit
[107]
or a second mortgage or you want to do a
[109]
refinance then you're going to incur
[110]
legal fees in order to register the new
[112]
mortgage against the property
[114]
and typically those legal fees are going
[116]
to be a thousand to fifteen hundred
[117]
dollars so
[117]
not necessarily a big deal especially if
[119]
you're refinancing for a significantly
[121]
greater amount of money
[122]
but if in the future it looks like you
[124]
are going to want to borrow more money
[126]
against your property
[127]
then a collateral charge may be the
[129]
right thing for you now let's talk about
[131]
collateral charges because what a
[132]
collateral charge is
[133]
is it is a charge against your property
[135]
up to a certain amount of money and it
[137]
can be for the amount that you
[138]
originally borrowed
[139]
it can be for the entire value of the
[141]
property and in some cases it can be for
[143]
even more so up to 125 percent of the
[145]
value of your property
[147]
and the collateral charge doesn't have
[148]
the details of your loan registered
[150]
against the title
[151]
it is purely and simply a charge for a
[154]
certain amount now that doesn't
[155]
necessarily
[156]
mean that you owe that amount but that
[157]
is the amount that the lender can lend
[159]
you
[160]
without having to re-register any
[161]
documents and then what you'll have is
[163]
separate loan agreements for all the
[165]
loans that you have that are
[166]
tied to that collateral charge so you
[168]
may have a mortgage you may have a line
[170]
of credit
[171]
you may have multiple mortgages so you
[172]
may decide that you want to set up your
[173]
mortgage between
[174]
variable and fixed and you do 50 50 and
[177]
you have two separate loan agreements
[178]
that are registered
[179]
to that collateral charge but don't
[181]
necessarily show up on your title
[183]
and what the collateral charge allows
[184]
you to do is to borrow money
[186]
reborrow money and basically have more
[189]
access to the equity in your property
[190]
without having to go back to the lawyer
[192]
every single time that you want to make
[194]
a change to your lending products now
[195]
some lenders use collateral mortgages as
[197]
a retention tool
[198]
so in other words what they do is they
[200]
register all of their mortgages as
[201]
collateral charges because they know
[202]
that if you want to move to a different
[203]
lender that you're going to have to pay
[205]
more for legal fees in order to move a
[207]
collateral charge
[208]
and they use that as a set of handcuffs
[210]
in order to try to make it more
[211]
expensive for you to move
[212]
so it's kind of a little bit of a trick
[214]
so the pros of having a collateral
[215]
mortgage are that it is easier to borrow
[217]
more money
[218]
less legal fees incurred if you decide
[220]
that you do want to register
[221]
more money against the value of your
[223]
property however the cons are
[225]
if you want to move to a different
[226]
lender it becomes significantly more
[228]
expensive
[229]
and also and this is the big one is they
[232]
can register
[233]
other products to your mortgage so
[234]
things like credit cards
[236]
car loans lines of credit all sorts of
[238]
things and
[239]
it can be things that wouldn't typically
[240]
be registered against your property
[242]
and what that can potentially do is if
[245]
you do something like
[246]
miss your payments on a credit card it
[248]
could potentially put your house into
[249]
foreclosure
[250]
now we've never seen this happen we're
[253]
unaware of
[254]
any sort of circumstance where a lender
[256]
has put a client into foreclosure
[258]
because they miss credit card payments
[259]
or car loan payments
[260]
but it is potentially something that
[262]
could happen under the guise of
[264]
a collateral mortgage so something to be
[266]
aware of and something to watch out for
[268]
now the moral of the story is this and
[269]
it's really quite simple if you're the
[271]
type of borrower who is going to get a
[272]
mortgage
[273]
pay it down and never needs to access
[275]
equity again in the future
[276]
or at least doesn't plan on it then
[279]
getting a mortgage that is a
[280]
conventional mortgage charge makes sense
[282]
because it gives you the freedom to move
[283]
around
[284]
easier more frequently and ultimately
[287]
take advantage of better rates of
[288]
different lenders over the course of
[289]
your mortgage it also makes sure that
[291]
the bank
[292]
has only access to what you owe them and
[295]
doesn't have the ability to register
[296]
credit cards lines of credit and other
[298]
things against your property
[299]
now the benefits to a collateral
[300]
mortgage are if you're the type of
[302]
person who
[303]
much like a self-employed person or
[304]
somebody who is an investor
[306]
is going to want to access the equity in
[308]
their property then a collateral charge
[309]
may be right for you if you want to
[311]
split up between fixed and variable
[313]
rates or have multiple products then a
[314]
collateral mortgage charge is right for
[316]
you
[316]
but at the end of the day if you're just
[318]
a normal borrower who isn't going to
[320]
want to borrow
[320]
against their property in the future
[322]
then it always makes sense to take a
[324]
conventional mortgage charge
[325]
over a collateral charge because having
[327]
the ability to switch to a different
[329]
lender down the road is definitely
[330]
something that is advantageous
[331]
especially if you can do it for much
[333]
cheaper than
[333]
you would with a comparable collateral
[335]
charge so really quite simple
[337]
collateral charges are for people who
[339]
want to or may need to borrow more money
[341]
down the road
[342]
conventional mortgage charges are for
[343]
those who will likely not need to
[345]
and ultimately always take a
[347]
conventional charge if you aren't
[348]
necessarily going to need to borrow more
[350]
money down the road
[351]
so i hope you enjoyed that video i hope
[353]
that that information serves you well
[355]
if you enjoyed it please do me that
[356]
favor hit that subscribe button hit that
[357]
notification bell and please
[359]
hit that like button so more people like
[360]
you can see this video and we'll see you
[362]
on the next one cheers
[382]
you
Most Recent Videos:
You can go back to the homepage right here: Homepage