A collateral charge mortgage is a home loan that your lender registers against your property for more than the amount you actually borrow, sometimes up to 100 or 125 percent of the home's value. That extra registered room lets you borrow more from the same lender down the road without paying to register a new charge, but it also makes moving your mortgage to another bank costlier when your term ends.
The alternative is a standard charge, sometimes called a conventional charge. A standard charge is registered for the exact amount of your mortgage and nothing more. Because the two are recorded differently on your property's title, they behave differently the day you want to change something.
The practical upside of a collateral charge shows up if you later want to tap your home equity. Your lender can often advance more money, add a line of credit, or set up a readvanceable product without a fresh registration and its legal cost. If you are curious how that kind of borrowing works, see our explainer on how a HELOC works in Canada.
The trade-off appears at renewal. A standard charge can usually be assigned to a new lender, so shopping your rate around at the end of a term stays simple. A collateral charge cannot be assigned. To switch banks you have to discharge the existing charge and register a new one, which brings legal fees that a plain assignment would avoid. That single difference is why some borrowers feel locked in when they go to renew their mortgage.
Lender practice varies. TD Canada Trust has registered its mortgages as collateral charges since 2010, and Tangerine uses them too. Scotiabank's STEP program is a collateral charge, though a standalone Scotia mortgage can be registered as standard on request. Other banks may offer either type. Whichever you choose, the charge is recorded on your property's title through Ontario's land registration system, and your lawyer reviews it before closing.
Knowing which type you are signing matters most if you expect to borrow against your equity or move lenders before the mortgage is paid off. It rarely changes your interest rate. What it shapes is your flexibility later.
Related reading: What Is a HELOC and How Does It Work in Canada?, What Is a Mortgage Renewal and Your Options in Ontario?, and Open vs Closed Mortgage in Canada: The Difference.