What’s the Difference? – Big banks, Credit unions, Monoline Mortgage Companies

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Exploring Mortgage Options in Canada: Beyond Your Local Bank Branch

When it comes to obtaining a mortgage in Canada, many individuals automatically turn to their local bank branch.

While banks can be a suitable choice for some, it’s crucial to recognize that they might not be the best fit for everyone.

This blog post will shed light on the various lending options available to Canadians, empowering readers to make informed decisions that could save them significant costs in the long run.

Exploring Different Mortgage Lending Options in Canada:

In Canada, individuals seeking mortgages have access to a variety of financial institutions.

Let’s take a closer look at three distinct types: big Canadian banks, credit unions, and monoline mortgage companies.

1 – Big Canadian Banks

Big Canadian banks are renowned financial institutions with branches spread across the country.

While they offer a comprehensive range of financial products, including mortgages, their lending criteria tend to be more stringent.

Typically, they require a good credit score and their mortgage terms and conditions are often criticized: Big Canadian Banks have been under fire in the media for their ridiculously expensive pre-payment penalties.

However, the advantages of choosing a big Canadian bank include a wide array of mortgage products to choose from as well as acceptance of a wider range of property types and locations.

These options encompass fixed and variable rates, open or closed mortgages, and different amortization periods.

Examples of big Canadian banks include Royal Bank of Canada, TD Canada Trust, Bank of Montreal, Canadian Imperial Bank of Commerce, and Scotiabank.

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2 – Credit Unions

Credit unions operate as member-owned financial cooperatives offering mortgages and other banking services.

One notable advantage of credit unions is their tendency to offer lower fees and interest rates when compared to big Canadian banks.

Moreover, credit unions often exhibit greater flexibility in their lending criteria.

This means they may be more willing to work with individuals who possess a lower credit score or a smaller down payment.

In British Columbia, well-known credit unions include Coast Capital Savings, Interior Savings, Kootenay Savings Credit Union, Vancity, and First West Credit Union.

3 – Monoline Mortgage Companies

Unlike banks and credit unions, monoline mortgage companies specialize solely in mortgages and do not provide other banking services such as checking accounts or credit cards.

These companies exclusively collaborate with mortgage brokers rather than dealing directly with the public.

As a result, they often offer competitive interest rates and mortgage terms.

Some prominent monoline mortgage companies operating in British Columbia include MCAP, First National Financial, Strive and RFA.

Conclusions and Further Thoughts

As Canadians embark on the mortgage application journey, it’s vital to consider the full spectrum of available options beyond traditional bank branches.

While big Canadian banks offer stability and a diverse range of mortgage products, credit unions can provide more flexible lending criteria and competitive rates.

Meanwhile, monoline mortgage companies specialize solely in mortgages, making them potential contenders for those seeking exceptional terms through mortgage brokers.

By conducting thorough research and comparing these options, individuals can secure a mortgage provider that best aligns with their unique needs in Canada and, specifically, British Columbia.



PS – One of my hobbies is blogging about mortgages, debt and government policy.  During the day I’m a MORTGAGE BROKER in Kelowna, BC!

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