A Guide to Monoline Lenders
Unlike banks which offer a variety of lending and investment products, Monoline lenders specialize in mortgages only. Low overhead and streamlined business models means Monoline lenders can offer lower interest rates on their mortgages. Combined with other advantages such as lower penalties and more generous pre-payment options, you could potentially save thousands of dollars on your mortgage.
Below we have listed our top 6 reasons to consider choosing a Monoline lender for your next mortgage:
1. Lower rates
Without the expensive overhead costs bourne by traditional Banks and Financial Institutions, Monoline lenders are able to keep their operating costs lower, and pass those savings on to their customers in the form of lower interest rates. Although Monoline lenders do not operate physical branch locations like the major banks, they do still maintain high levels of customer service via online and phone support.
2. Lower penalties
A pre-payment penalty is a financial penalty paid by the borrower in the case of the mortgage being paid out before the term is up. Monoline lenders use a different formula than banks to calculate pre-payment penalties. Oftentimes the difference is thousands of dollars, which is a huge cost savings if a customer has to break their mortgage contract.
3. Secure & Regulated
Monoline lenders are required to follow all of the same regulations & lending guidelines as the banks. In addition, all mortgage funds issued by Monoline lenders are secured with insurance from one of Canada’s three mortgage insurers: CMHC, Sagen and Canada Guaranty.
4. Flexible & Timely Approvals
In addition to standard mortgages, some Monoline lenders offer lending programs that specialize in different areas such a self-employed clients, new residents to Canada, or lower than average credit scores. Approval times tend to be quicker with these lenders than with traditional banks, which can make a difference when you’re dealing with tight timelines on a home purchase.
5. No Cross-Selling
Since Monoline lenders only sell mortgages, you won’t have to deal with cross-sales calls for products like investments, bank accounts, insurance, credit cards, etc.
6. Standard Charge Registration
Mortgages from Monoline lenders are registered on title as a “standard charge” rather than a “collateral charge” (which many major banks do.) This means you can transfer the mortgage to another lender at the end of the term without incurring legal fees (as long as there isn’t a 2nd mortgage or secured line of credit also registered on title.)
Here are some of the more commonly known lenders that we currently work with:
- CMLS Financial
- First National