If you’ve heard the term ‘monoline’ lender, chances are, you’ve used a mortgage broker to negotiate home financing on your behalf.
Although not as well known as banks and credit unions, monolines provide excellent mortgage solutions to meet the needs of a variety of different borrower types.
While banks and credit unions provide an assortment of financial products and services in addition to offering mortgage financing, monolines solely concentrate on mortgages. The term ‘mono’ literally means ‘one’, as in a singular focus.
Monoline lenders have a great reputation countrywide and follow the same rules as Canadian banks, so you’re well protected.
Competitive mortgage marketplace
As a mortgage broker, I value monolines in the mortgage space as they offer very competitive pricing and specialized products that help me ensure I find the mortgage product and rate that best matches each client’s needs.
Monolines also help keep the banks competitive. In fact, monoline lenders often source their funds through the big banks – even ones that don’t lend directly through the mortgage brokering channel.
Monolines are frequently able to pass along better deals to borrowers because they don’t face the high overhead costs associated with branch locations.
Additionally, if you must break your mortgage early with a monoline, you’ll likely pay a lot less in penalties than if you have your mortgage placed with a major bank. That’s because banks and monolines calculate penalties differently. Early exit penalties, for instance, are typically calculated using three months’ interest or the interest rate differential (IRD) – whichever is higher.
The IRD is the penalty that can really add up with the banks. Here’s a comparison between bank and monoline prepayment penalties.
If you’re considering breaking your mortgage early – which the majority of Canadian mortgage holders end up doing on a standard five-year fixed-rate mortgage – I can help you decide if it makes sense or if you should wait out your current term.
Have questions about breaking your mortgage early, or your mortgage in general? Answers are just a call or email away!
*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.