A collateral charge is a type of mortgage registered against your property.
Unlike the typical 'standard charge' mortgage, a collateral charge allows the lender to:
- Secure multiple loans against your property
- Register the charge for more than the actual mortgage amount, sometimes up to 125% of the property value.
This structure makes it easier to borrow additional funds in the future without refinancing. However, it can limit your ability to switch lenders without incurring extra mortgage registration costs.
Readvanceable mortgages are commonly registered as collateral charges.