Mortgage brokers work with a wide variety of lenders ranging from major banks and credit unions to private lenders and monoline lenders. If you have never heard of a monoline lender, you are not alone, but mortgage brokers love to work with them because they can often offer their clients the best rates.
What is a monoline lender?
A monoline lender is a lender that focuses on only one financial area and for the purposes of this article, when we refer to monoline lenders we will be referring to lenders who only focus on mortgages. These lenders know their product extremely well because they only have one product. They do not offer RRSPs or savings accounts – just mortgages. Oftentimes they get even more specialized and focus on specific types of mortgages like mortgages for business owners or mortgages for newcomers to Canada or mortgages for property investors.
Also, they do not have branches like banks do. The only way to access a monoline lender is through a customer service hub or through your mortgage broker.
What are some advantages of working with monoline lenders?
Perhaps one of the biggest benefits of working with a monoline lender is that they can often offer better rates. Since they have very little overhead to maintain, they can pass on those savings to their customers. And the savings do not stop with their rates. If you have to break your mortgage – or wish to pay it off early, monoline lenders usually have the lowest penalties for doing so.
There are other benefits too. When you apply for a mortgage with a monoline lender, you never have to worry about them contacting you to sell you other products like credit cards, insurance, etc. They also have some unique products that you may not be able to get at your bank like 35 amortization and automatically increasing home equity lines of credit.
Monoline lenders are often the best option for people with credit issues including past bankruptcies and consumer proposals because these lenders tend to be better at looking at the bigger picture than traditional lenders.
But are monolenders safe?
The answer to this question is yes! Monolenders are required to follow all the same rules that banks do. And many of them are backed by major pension funds and even Canadian banks!
Overall, monoline lenders are a great option for Canadians looking to get a mortgage.
If you would like to learn more about monoline lenders, contact a member of the Akal Mortgages team today.
When we say YES! We stand behind our promise.®™