Some may think that a mortgage and a Visa would not be directly related. One being ‘good debt’ and the other being ‘bad debt’. However, in the banks world they mean the same thing and can come back to harm you in a great way.
A collateral charge mortgage have a couple reasons why they’re not my biggest fan, however, I’m not writing today to talk about those. I’m here to write about a little thing that you would not think could be such a problem.
When the banks register a collateral charge mortgage, they can essentially add your visa’s, line of credits, over drafts etc in to them. This can cause a huge problem as it did to the one fellow I spoke to today. Believe me, it’s not the first time I’ve heard it.
Most people will always find a way to pay their mortgage as you need a roof over your head. If things in life go wonky sometimes the Visa’s get missed as you’d think it can’t be a problem linked to my house….Well it can be.
The fellow I spoke to today has never missed a mortgage payment, however, since he lost a job and was struggling to pay his Visa and it was tied to the property, the bank came after him threatening foreclosure if he doesn’t settle up asap.
What we are having to do now is take out a higher interest second mortgage to clear things up and get him back on track, which helps him. Problem though is now the bank may see that he is a ‘high risk’ to their portfolio and when it’s time to renew the bank may not. I’ve seen it happen, more than once.
And sometimes, due to the collateral charge and the way it’s registered on title to be of more value than your property, a second mortgage is not an option. Loss of the home is much higher now. Again, I’ve seen it happen, more than once.
Would you risk losing a home to some missed Visa payments?
Please, please, always talk to an individual mortgage broker as we have options. We have products that the banks don’t have access to that not only provide great pricing, but, GREAT products that have your interest in mind.
Thank you!