Our Lending Partners

We all recognize the 'Big 5' banks in Canada, and while this may be a good option for some, it is a costly mistake for many. When choosing your mortgage, there are multiple different options.

Banks

The banks are well-known. The names of the banks can be found on anything from billboards to hockey rinks. Banks provide a well-known and trusted brand. That dedication, though, can come at a price.

While banks may generally offer affordable mortgage rates, that isn't the only factor to consider when applying for a loan. Prepayments and penalties are two further considerations.

When it comes to banks, they have some of the most restrictive prepayment policies. Some banks will only allow you to make extra lump sum payments on your mortgage anniversary date once a year. If prepayments are important to you, make sure to inquire about them.

Bank penalties are also something to keep an eye on. Banks are notorious for having the harshest mortgage penalties. This is because the banks calculate your mortgage penalty using their inflated posted rate. According to statistics, six out of ten Canadians break on their mortgage before the end of the term, therefore penalties are something to be aware of.

When you sign up for a mortgage, banks may offer you cashback, but keep in mind that if you break your mortgage, as many Canadians do, you may have to pay back most if not all of the cashback.

Monoline Lenders

You might not be familiar with the terms monolines or monoline lenders. These are non-bank lenders who only work with mortgage brokers. There aren't branches on every corner of monolines. However, as a result of this, their overhead expenses are far reduced. They pass on those savings to you in the shape of lower mortgage rates and more favourable terms and conditions.

Prepayment privileges are typically always better on monolines. Making lump sum payments on any of your normal mortgage payment dates throughout the year, rather than simply once a year as some banks require, is pretty common.

Penalties are another area where monolines have a significant edge. Monolines, have much more lenient mortgage penalties than the big banks. At a monoline lender, your penalties may be three or four times lower than at a large bank. Remember that on average, 6 out of 10 Canadians pay the penalty throughout the course of a 5-year mortgage term, so it's something to keep in mind.

Credit Unions

Credit unions are often local, community-based lenders. Credit unions are frequently better at catering to the demands of the local community because they are familiar with the area.

Credit unions are provincially regulated which can have its advantages unlike banks that are federally regulated. However, credit union penalties can be just as harsh as bank penalties, so be cautious. There are a variety of reasons why you might break your mortgage, including upsizing your home, a job promotion, marriage, a new child, or divorce. Credit unions also tend to offer higher rates.

Also, because credit unions are provincially regulated. This means that if you move to another province, you can’t move your mortgage with you, so be careful.