- Business Administration Degree with a Major in Marketing from Red River in 2007
Why you should know what a MONOLINE lender is...
Monoline Lender Definition: Monoline lenders (aka non-deposit-taking lenders) are an important cog in the mortgage market. Their mortgage products andlow pricing improve consumer choice and force our dominant banks to be more competitive.
Being a part of VERICO One Link Mortgage I have access to over 50 different lenders which include banks, credit unions, monoline lenders, alternative lenders, and private lenders. As the largest mortgage brokerage in Manitoba along with being a part of our national network VERICO, I am able to offer the most competitive mortgage rates. The lowest rates we advertise are often offered by Monolines. Some reasons for that are the fact they strictly do residential mortgages and have low overhead costs. So why do people ultimately choose a monoline?
Frequently Asked Questions:
Q: Are there any risks to deal with a Monoline?
A: No, there really arent any. Monolines are regulated by the federal government just like the major banks so they must follow similar lending guidelines and regulations. Fun fact, many Monolines receive their funding from major banks!
Q: What if a Monoline decided to leave the market place?
A: Another lender would take over their mortgages and the terms and conditions of their existing mortgage stays intact. A great example is a company I used to work for, FirstLine Mortgages, they decided to leave the marketplace and CIBC took over their book of business and services all of those mortgages.
Q: What are some other benefits to using a Monoline than just a low rate?
A: Well monolines typically have smaller penalties in the event you have to break your mortgage, pre-payment options that are typically better than the banks, monolines register a standard charge term on the title of your property which allows you to move to any lender once your term is up to take advantage of the best rates on the market. Banks and credit unions tend to register collateral charges which would make you incur legal fees to transfer your mortgage at the end of the term.
Here are some advantages of monoline lenders:
They focus on one line of business: mortgages. This allows them to focus on providing the best possible mortgage products
No bricks and mortar buildings, they are virtual banks essentially, making their overhead costs lower passing on savings to the consumers.
The mortgage industry is heavily regulated by the government now more than ever, so whether youre dealing with a major bank or monoline lender they are subject to satisfying the same guidelines for qualifying and approving customers.
Mortgages are registered on title as a standard charge and not collateral charge which means you can transfer the mortgage to another lender at the end of the term without incurring legal fees (providing there isnt a 2nd mortgage and/or secured line of credit on title)
Rates are often lower than the major banks (no posted rates like the banks) which typically result in a lower penalty should the mortgage be discharged prior to the end of the term. Fun Fact; the average a Canadian is in their mortgage for is 3 years.
Really good pre-payment options available
They also offer online access to your mortgage as well as customer service departments to take on telephone inquiries. I always tell my clients to contact me for any mortgage questions and I will be able to help OR lead you in the right direction. Most of the time I can have a client consent form signed by the borrowers and deal with the lender on my clients behalf.
Some disadvantages people have expressed to me over the years would be that some people physically like to walk into their bank and speak to someone. My solution for that is my office is always open to my clients to speak about their mortgages and better yet I can be reached outside of regularbank hours. The other comments I have had arepeople like to have everything in one placewhich is completely understandable, however, if you can get a better rate and mortgage product elsewhere does it become as important if youre saving money?
As a broker it is my job to make sure my clients pay the least amount of money over the term of their mortgage and for years after that. Every circumstance is different and I make sure I evaluate every clients needs and make recommendations oflenders based on their needs, most often it is a monoline lender. Fun Fact, I have my own mortgage with a monoline.
*Some monoline lenders I use; MCAP, RMG, First National, Merix, Lendwise, LifeCycle, CMLS, and Radius.
Calling All First Time Homebuyers- Don't Become House Poor!
When looking to purchase a home, two of the most common questions Im asked are, 1) Whats the best rate? and 2) How much do I qualify for? Ill address number one in my next blog post but for now Id like to focus on number two.
As a first time homebuyer, theres never any harm finding out how much you qualify for. With todays stress test used qualify mortgages at a rate almost double what youre actually paying and prudent underwriting requirements, your max purchase price may be what youre looking to spend anyway. HOWEVER, just because you qualify for that amount doesnt mean youre going to want to spend it. What I like to do is let you know what you qualify for and how much the associated payments will be. Then I ask how much are you willing to pay monthly? for your mortgage and other monthly homeownership costs. A lot of first time buyers will then take a different approach to how much they actually can afford. You dont want to end up being house poor. You want to be able to go out for a couple patio drinks with friends on a Friday after work or play on your rec sports team without going into debt. Life is all about balance.
So lets break down the fixed monthly expenses you can expect when buying a house.
1) Mortgage principal and interest payment
2) Property tax (you can deduct $700 from the gross taxes for you primary residence)
3) Life/Disability insurance (the younger you are the cheaper it is)
4) Utilities: Hydro/Gas, Water, Cable/Internet
5) Property insurance
When first time buyers get a mortgage payment quoted to them, that payment is just your principal and interest mortgage payment, it doesnt include all of the other expenses a house brings.
So using a real example;
Min Down payment (5%)
Estimated Closing Costs (2%)
** Extras Include:
NOTE: this is just an example and will fluctuate depending on house and area but is a good guideline.
This example is a good indicator of what types of extra expenses are included in a house that may have been overseen. Make sure you work with a mortgage professional to help you figure out what is manageable for you so you dont find yourself house poor.
Are These Professionals In Your Life? If Not It Could Cost You!
Aside from having professionals like your family doctor and dentist you see once a year, it is very important to have people you trust working for you. People you can phone and pick up right where you left off whether its been 1 month or 5 years. Most professionals work on a commission basis or earn money based on making you happy or continually bringing you benefit. A good professional will keep you up to date and have your best interest front of mind with any transaction you need. Professionals in your life not only help save you thousands of dollars but also help you sleep easier knowing you and your family are being looked after. Here are some professionals you should have in your life;
1) Mortgage Broker- Mortgages are the largest debt you will take on in your life. They are very complex especially with constant changes happening in the industry. You need someone who focuses on mortgages day in and day out knowing which mortgage products are best suited for you so you dont incur large penalties down the road. Mortgage professionals can help you achieve your goals of homeownership and becoming mortgage free faster. Best of all, mortgage broker services are free!
2) Financial Planner- Who wants to retire when theyre 80?! Having a financial planner working with you as early in your life as possible will really help you understand the value of saving early. Financial planners not only help you reach retirement goals, they can help save money on taxes through RRSPs. Theyre also licensed life insurance agents to ensure you are fully covered incase something unfortunate happens. They make a good chunk of their money off commissions, so when you do well, they do well.
3) Realtor- I cant stress enough the importance of using a realtor, especially when you are a first time buyer. It doesnt cost you anything and their opinion on the house, location, resale value are invaluable when everything is so new to you. A realtor is there to represent you and your best interests. They have access to multiple marketing sites and also have valuable information about comparables to ensure you dont over pay when buying and to price your house right to sell it quickly, maybe even receive multiple offers. Working with a realtor you trust is an important asset to you. If youre buying a home using a realtor is no cost to you.
4) Insurance Broker- Who gets home insurance and reads it thoroughly to make sure everything you possibly need to be insured for is insured? I know I dont. Its important to have low insurance payments but its even more important to make sure youre being covered for what you need. Insurance agents are commission based, working with a trusted advisor can help save you time knowing they are looking for the best coverage and premium for your needs.
5) Lawyer- There are 2 types of lawyers I would suggest working with. 1) Family lawyer: these lawyers will help set up wills and amend wills 2) Real Estate Lawyer: some lawyers are well versed in family and real estate law but if you have a lawyer that isnt actively participating regularly in real estate I would strongly suggest you find a lawyer that is. There are many mortgage lenders in the industry, from monolines to banks to credit unions to private lenders and each lender is unique. The documentation a lawyer is required to produce for some monoline lenders is heavier than some traditional lenders but that monoline may offer a better mortgage for you. If youre using a lawyer that isnt familiar with the paper and processes of certain lenders it could end up costing you more in the end for the extra time and efforts the lawyers need to process your mortgage.
6) Accountant- For salaried and hourly people this isnt as important but once you have some fluctuating income, youre a sales person, or business for self, it is very important you have an accountant that makes sure your is are dotted and your ts are crossed. They could save you a ton of money in the end not to mention if CRA comes knocking you want to be sure you have a professional behind you that did your taxes.
7) Health and Fitness professional- You wont need any of the above for a very long time if you dont take care of yourself. In my mind if you dont have your health then your life isnt going to be enjoyable. Whether its walking, running, going to the gym, playing sports, personal training, crossfitting; whatever it is, spend that little extra money each year to make your health a priority. Having a nutritionist and massage therapist isnt the worst thing either. A lot of employees have benefits, which include a certain dollar amount for health each year. I have seen some companies pay for healthy related things like gym memberships, hockey registrations, nutritionist consultations, and massages. So, if you have benefits, make sure youre using them!
8) Car Repair Shop- I dont know a lot of people who enjoy taking their car in to get fixed. Personally I know nothing about cars but I do know when I call my car shop they know me by my first name and dont even have to look up the car Im driving. When I take my car in they could be speaking gibberish to me but because I have someone I trust isnt taking advantage of me and will fix my car right and quickly, I can hand over my keys feeling a little less stressed.
Written by Caily MacGregor, AMP