What is a Monoline Lender? Five Questions Answered

Category: First Time Buyer,

Get informed about monoline lenders and increase your mortgage options. Understand non-bank lenders and make better borrowing decisions.

Monoline lenders are a great option for mortgage-seeking Canadians, but they’re often misunderstood or overlooked entirely. The truth is that they add competition to the landscape by providing borrowers with a unique financing alternative, often with better rates and terms than those offered by traditional lenders. Let’s clear up the confusion by addressing five questions that consumers typically have about monoline lenders. 

What is a Monoline Lender? 

Monoline lenders, also known as non-bank lenders, deal exclusively in mortgages. That means no savings accounts, credit cards, investment services, or any of the other services offered by mainstream financial institutions. By staying clear of these areas they’re able to achieve singular focus. 

Monoline lenders are not public facing, but can be accessed exclusively through mortgage brokers. Because of this arrangement, they are often less invested in advertising and public relations, so you may be less familiar with their brands. 

A Different Model

Monoline lenders don’t have the brick and mortar locations or extensive salaried staffs that banks are famous for but, instead, focus on flexible policies, solid relationships with mortgage brokers, and maintaining good online customer service. 

Are Monoline Lenders Safe? 

In a word, yes, borrowing from a monoline lender is as safe as dealing with a bank.

Because of their relatively low public profile, some people look at monoline lenders with suspicion. In fact, it’s only their delivery model that is unique, the fundamentals of their lending are not that different from banks and other lending institutions.

Monolines are heavily regulated by the government and follow the same rules as the banks do. In fact, they’re often financed by banks! They are required to hold licenses from Canada’s regulatory bodies and their loans are secured through insurance and massive holdings. Even though they’re not household names, these lenders do major business and represent a significant portion of the Canadian lending market. 

In the rare event that they go bankrupt or are acquired by another institution, your loan is simply transferred to another company, with the terms remaining intact. 

Monoline lenders are not to be confused with private lenders who are much less regulated. By doing business with a trusted mortgage broker, borrowers can remain confident that they’ll be steered free of danger. 

What are the Advantages of Monoline Lenders?

Monoline lenders will often offer lower rates than other lending institutions, particularly for fixed rate mortgages. This is made possible, in part, by their lower level of overhead. 

Their terms are often more flexible as well. Pre-payment options are generally more accommodating, and penalties for those who break their mortgages are more forgiving. 

Getting approved for a loan consists of many factors but, compared to the banks, monoline lenders are known to be more open to those who are self-employed, as well as to those who have inconsistent incomes or weaker credit scores. 

Another result of their streamlined activities is that turnaround times are generally shorter with monoline lenders. These quick approvals, when combined with their good customer service, make them an attractive option for both borrowers and brokers. 

Mortgage holders should not be put off by the lack of a physical location to visit, but should instead consider the combination of mortgage broker and monoline lender to be a customer service dream team that they can have total confidence in. 

Who are Canada’s Monoline Lenders? 

While you might not see their names on billboards or hockey telecasts, Canada’s monoline lenders are numerous, sizeable, and stable. New entrants or acquisitions will periodically alter the landscape, but there is never a lack of options.  

First National, MCAP, RMG Mortgages, Street Capital, CMLS, Merix, and RFA are among the non-bank lenders currently servicing the Canadian marketplace. If you have questions about a particular lender, Pinsky Mortgages is happy to offer our perspective. 

Is a Monoline Mortgage Right for Me? 

This is not a question that can be definitively answered in a blog post. Monoline lenders do provide a choice and it’s often the best one available. However, making a good determination about what’s best for you boils down to the rates and terms being offered at a particular time, as well your unique situation. 

While Pinsky Mortgages works closely with a number of lenders, we ultimately work for you, our client. That’s why we offer free consultations where we take the opportunity to learn about you, your goals, and your financial picture. It’s also why we place an emphasis on education, ensuring that everybody makes informed decisions that work for their benefit. We’re happy to answer all of your mortgage questions!

If you’re looking to gain perspective on which borrowing alternative is best suited to you, book your free consultation with Pinsky Mortgages today! 

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