Did you know that when you’re applying for a residential mortgage, you can choose a traditional or collateral mortgage? Not all banks have similar types of mortgages and some banks do not provide traditional residential mortgages. Find out the differences between traditional and collateral mortgages and decide what is right for you.
Traditional residential mortgages are registered with "terms of mortgage" that specifically set out things such as the principal amount owing, interest rate, term, payment amount, etc. You may be required to enter into a new mortgage loan or replace the old mortgage loan with a new one in order to borrow more money.
A collateral mortgage allows you to use your home as security for a loan or more than one loan and, potentially, borrow additional funds. Because a lender may register the mortgage for an amount that is more than your initial loan, you are able to change loans and other credit agreements without having to register a new mortgage provided the total amount owing is less than the principal amount of the collateral mortgage.
RBC Royal Bank® provides both traditional residential mortgages and collateral mortgages. Depending on your needs, you can explore a variety of mortgage products with RBC Royal Bank. You should note that not all banks have similar types of mortgages and some banks do not provide traditional residential mortgages to their customers.