A collateral mortgage in Canada is a home loan where the property serves as collateral and the lender may offer a larger sum than the home’s cost. This arrangement provides flexibility, allowing homeowners to access their home equity without needing to negotiate a new mortgage. While useful for funding large expenses or investments, shifting to another lender may be more complicated with a collateral mortgage than a conventional mortgage. Also, costs associated with borrowing against home equity should be carefully considered. Hence, deciding on a collateral mortgage should be based on personal financial factors and the value of additional flexibility.