Sometimes also called “A Lending”, these are nationally based, traditional but innovative mortgage-lending institutions that specialize in providing discounted mortgage-lending products to Canadian consumers. These mortgages are suited for those with good to excellent credit and employment stability. These applicants can easily get approved for a mortgage from their own financial institution but often choose to shop for a mortgage via an independent mortgage broker who matches them directly with an alternative mono-line mortgage provider. Often these mono-line mortgage contracts provide better interest rates, terms, pre-payment penalties and annual pay down options etc. The best way to access these mortgage lenders’ products and services is through an independent mortgage broker.
The Real Truth about Mono-Line Discount Mortgage Lenders
To some consumers, a discount mortgage sounds too good to be true. The truth is, these mortgage lenders are able to offer superior mortgage products and service for a few reasons:
1.) One revenue stream: It’s their main or only source of business so being competitive is a must to survive in the marketplace.
2.) Lower overhead: Traditional banks have a business model that requires their branches to be strategically located across the country on high overhead street corners. These mono-line mortgage lenders utilize technology and only require a small number of discreet office locations across the country to service all of their customers. They pass on this savings of overhead onto their customers.
3.) No expensive marketing: Mono-line lenders don’t advertise on TV, radio, newspapers, or magazines, etc. They have established business relationships with independent mortgage brokers who know their products and market these niche products directly to the consumer. This is an effective, win-win-win, business model because the client receives a free service that allows them to acquire the best mortgage and the independent mortgage broker gets a finder’s fee from the mono-line lender that funds their clients’ mortgage.
Your Comfort Level
1) No Cross selling: These lenders have limited products so they won’t try to force you to sign for other banking products like credit cards, line’s of credit, insurance etc. you don’t want or need just to guarantee the interest rate they promised on your mortgage as some banks do.
2) Household name: Sometimes a client might need a little reassurance, as they haven’t heard much about the suggested mortgage provider. What I do is provide enough information and reasons why I suggest using a particular mortgage lender in order for the client to feel comfortable that they are making an excellent and well-informed decision.
3) Length of time in business: Yes, it’s true that some mono-line lenders have been in business only a fraction of the time as the big banks. I have had clients say, “What if this lender goes out of business? What happens to my mortgage then?” One should be so lucky that an institution you owe money to no longer exist! What happens if another financial institution will buy all the assets that the lender going out of business had on their books including any mortgages? Your existing lender and the new lending institution will notify all of its affected clients in writing. Your current mortgage contract, by law, has to stay the same. Upon the end of your mortgage contract, the new financial institution will allow you the typical options to renew, transfer, or refinance your mortgage.