Bank or Monoline?
For most of us who do not work in the mortgage industry the only lenders we know of and come across when needing a mortgage related service are the traditional schedule “A” Banks.
There are 5 major banks in Canada. Royal Bank of Canada, Toronto Dominion, Bank of Montreal, Scotiabank, and CIBC. However, there are many more lenders, who do not fit the brick and mortar profile of the traditional bank but have been in the mortgage market for many years.
These lenders are known as monoline lenders, because their primary focus and often the only product/service is mortgage related.
So what are the main differences between a major bank and a monoline lender.
Major Bank Monoline
Brick and mortar business with many branches Totally online services
Offers many different services Focus is only mortgages and mortgage related products
Operating across all Provinces Operations may be provincial or national
Penalties calculated as posted to discount rate Penalties are usually contract to contract rate
(generates the highest penalty for borrowers) (Generates lower penalty for borrowers)
Cross Selling Involved and expected by Managers No Cross Selling Involved
Can register mortgage as a Collateral Charge Mostly registers mortgage as a standard charge
(Generally higher legal cost when breaking)
Staff usually handles multiple products for borrowers Staff only work on mortgages and mortgage
(Lack of expert knowledge may be an issue) Related products
They are balance sheet lenders They are often security backed lenders
(They use our money to lend back to us) (They have investors who pool funds together
To invest in mortgages)
Some of the largest mortgage lenders in Canada are monoline lenders such as First National (largest non-bank lender), Equitable Bank, MCAP and more.
As with everything else, there are no lenders 100% good or bad for you. It all depends on your financial, credit and down payment situation, what you are trying to achieve and your future lifestyle goals.
And with us by your side, you get to have us shop both the banks, credit unions and monoline lenders to find the most suitable products and lenders for your particular needs.