CBCâ€™s Marketplace went undercover to one big bank to see how transparent it was about collateral mortgages and the fine print associated with them.
In a follow-up to an original segment about collateral charge mortgages at TD Bank â€“ 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 â€œtestâ€ the bankâ€™s promises.
At the first branch, the undercover journalist asked the specialist if there was any difference between a TD mortgage â€“ which includes a collateral charge — and one offered at other banks. The specialist failed to mention anything about collateral charges.
â€œIâ€™ll be perfectly candid with you, most of the banks that youâ€™ll go into, the sort of terms and rates and everything are going to be pretty similar,â€ 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.
â€œIt is, but I donâ€™t know if it actually advantages you if youâ€™re constantly shopping around on rates youâ€™re losing out on sort of the substance of the relationship, and thatâ€™s what really improves on things,â€ the bank employee said.
At a second branch, the specialist was asked to explain collateral charge mortgages.
â€œTD has a charge, a registered charge on your property. So thatâ€™s what the mortgage is tied against is the home. So if we lend you money thatâ€™s what the charge is,â€ a second employee said. â€œItâ€™s a charge, right, itâ€™s technically collateral, so the bank has that collateral on your â€¦ property. And thatâ€™s why weâ€™re able to â€¦ lend off low interest rates.â€
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 CBCâ€™s entire segment, click here.