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A collateral charge is a mortgage registered against a property for an amount that can be higher than the loan actually advanced, securing the initial mortgage plus potential future borrowing, such as a HELOC, all under one registration.
By registering the charge for more than the current balance, a lender leaves room to advance additional funds later — for a HELOC, a top-up, or another loan — without filing a new registration each time. This is what makes a readvanceable mortgage possible. Depending on how the charge is worded, it may also secure other debts the borrower owes the same lender, not just the original mortgage, so it's worth reading the charge terms carefully.
The trade-off comes at renewal. Unlike a standard charge, a collateral charge generally cannot simply be assigned to a new lender; a switch or transfer to another institution usually requires a full discharge and re-registration, which can add legal and land-registry costs.
Enables readvanceable products: collateral charges are commonly used for mortgages bundled with a HELOC under one registration.
May secure other debts: depending on the charge's wording, it can secure other amounts owed to the same lender beyond the original mortgage.
Switching lenders is more involved: a straight switch at renewal typically requires a full discharge and new registration rather than a simple assignment.
Discharge and registration costs apply: borrowers should budget for legal and land-registry fees when moving a collateral-charge mortgage to a new lender.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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