In response to the recent article “Excessive, personal debt a concern” featured in an article written by Tavia Grant in the Globe and Mail, I find it very interesting that at a time when bank economists are reporting on the concern around excessive household debt, their branches are encouraging borrowers to opt for a “collateral” mortgage and register at a higher amount than they need. It is disturbing given that we have spent the better part of the last year consolidating (interest only) Lines of Credit into mortgages and restructuring Home Equity Lines of Credit (HELOC) products so that debt is on a set repayment schedule. Take note that a collateral mortgage ties you to the bank; the terms of this credit vehicle are not transferable to another lender or portable to another property.
Take the time to understand how the bank plans to register your mortgage on title before the paperwork gets to your lawyer’s office. For the most part, you should accept no less than a regular “blended payment” mortgage, registered to allow the flexibility that you may need down the road. I would suggest you limit the mortgage amount to what you need to avoid temptation and protect your family from unnecessary vulnerability.
Feel free to contact me directly to review your repayment schedule.