12 Jan

What is a Monoline lender? 

About Mortgage Brokers

Posted by: Garth Chapman

What is a Monoline lender?

A Monoline lender, by definition, is a mortgage lender that focuses on just mortgages.  They do not have any other products that can be cross-sold and most Monolines securitize their mortgages, instead of keeping them on their balance sheet.  Monolines are secure, follow the same rules as all Canadian Banks and they deal exclusively with Mortgage Advisors on their clients’ behalf.

Advantages of a Monoline lender

  • They focus on one thing: mortgages.  For you that also means they do not try to cross-sell you into credit cards, investments or insurance.
  • Monolines have a much lower IRD (Interest Rate Differential) pre-payment penalty calculation, which is important if you are required to get out of your mortgage before the end of your term. In my own personal experience the Monoline penalties are up to 2/3 less than those of the big-six banks.
  • They often have products that specialize in a range of solutions aimed at borrowers with lower credit scores and those with self-employed income sources.
  • No storefronts mean lower overhead which in turn they pass along to you in the form of lower interest rates.
  • Monolines are heavily regulated and follow the same lending guidelines as all the major banks in Canada
  • Pre-payment options are often greater than the big-six banks offer.
  • Online access to your mortgage and customer service departments is excellent – it has to be – they don’t have branches.

This article by financial writer Rob Carrick was published in the Globe and Mail comparing Scotiabank to ING regarding their vast differences in penalty calculations.  As much as we try to explain what a Monoline differs from a bank, an article from a third party drives it home.

Even when the rates are the same between banks and the Monoline borrowers should always factor the potential IRD into their decision making as one never knows what will happen in the future

To summarize, Monoline lenders tend to provide better rates over the big banks, have favourable penalty calculations, and foster relationships with brokers to ensure the business comes back to them (including having a renewal model to reduce churn).

12 Jun

Why Use a Mortgage Broker?

About Mortgage Brokers

Posted by: Garth Chapman

A professional mortgage broker has your interests in mind. They have the knowledge and experience to save you time and will act as a valuable partner throughout the entire mortgage process, expertly handling complex details with the real estate agent, lawyer, lender, and the credit agency. We have the negotiating power and expertise to offer you the best choices available for your specific needs.

  • Jencor Mortgage is independently owned and operated; working for you, not the banks. We believe in unbiased independent advice.
  • Since we’re not affiliated with any one lender, Jencor can offer you the widest choice of mortgage options from dozens of different sources. That includes Canada’s largest banks, insurance firms, pension funds, private lenders and more.
  • Because we place thousands of mortgages each year with different lenders throughout Canada we can obtain rates that are consistently lower than many other Canadian brokers.
  • Because we specialize in mortgages and nothing else, we’re always aware of the latest products on the market. If a mortgage that suits your needs becomes available, we’ll know about it immediately and make sure it’s part of the choices we offer you.

And…all this comes at no cost to you, as we are paid directly by the mortgage lenders.