What Is A Collateral Mortgage?
A collateral mortgage charge is a mortgage registered on the title of a property for more than the amount borrowed. A borrower may opt-in to take allow the lender or bank to register a collateral mortgage on their property.
Often in private mortgage or second mortgage transactions, a borrower must allow the lender to register a collateral mortgage. A collateral mortgage can often be registered on multiple properties as additional security for a bank or lender.
Benefit Of A Collateral Mortgage
The benefit of a collateral charge is that the borrower(s) can borrow additional monies from their property, up to the collateral mortgage amount without paying future legal fees.
Disadvantages Of A Collateral Mortgage
The disadvantage of a collateral charge is that the borrower(s) may not be able to seek additional financing from any other mortgage lender or bank, other than the lender that has registered the collateral charge on their property.