What is a Monoline Lender?

We access these lenders because, well, we can — to give you an advantage for better rates and mortgage options.

Apr. 04, 2016

Post updated June 2021

What is a Monoline Lender?

One line of lending, for better rates and more flexibility.

True North Mortgage is the largest independent mortgage brokerage in Canada. We partner with several 'A' lenders to offer your best mortgage rates and solutions, including major banks and trust companies — and Monoline lenders.

Monoline lenders only offer mortgages. They don't offer any other lending services, such as credit cards or even chequing accounts, and usually don't have physical locations. Their simple business model means low overhead, and their focus is strictly on residential mortgage clients. Major banks can't access them, but we can. In fact, the lowest rates we advertise are often offered by Monolines, including our own THINK Financial.

Are there any risks in using a Monoline lender?

Monolines are no riskier than any other type of bank. They're in the business of lending money, not holding it, but they have the same strict government regulations as the major banks. They also must follow similar disclosures and lending guidelines. In fact, many Monolines actually receive funding from major banks.

Should a Monoline lender terminate their business operations, another financial institution would take over their mortgages. For example, when Scotiabank acquired Tangerine (formally known as ING Direct) along with FirstLine (who was in the process of transferring their mortgages over to CIBC), all of the mortgages held stayed 'as-is' throughout the process, with virtually no impact to the borrower.

Monolines can offer many benefits beyond lower rates.

Because a Monoline lender focuses on residential mortgages, they can offer more flexibility in approval turn-around times, pre-payment options, and penalties in the event that you have to break your mortgage.

A quick take on the advantages of monoline lenders:

They only do mortgages, which means clients aren't cross-sold on other products, such as chequing or savings accounts, personal insurance, investments, or credit cards
No storefronts means lower overhead, with the savings passed along in the form of lower interest rates
Heavily regulated, just like the rest of the mortgage industry, with the same client protections in place as for the major banks
Monoline mortgages are registered on title as a 'standard charge' instead of 'collateral charge,' which means clients can transfer to another lender at the end of the mortgage term without incurring legal fees (providing there isn’t a 2nd mortgage and/or secured line of credit on the title)
Some monoline lenders are more flexible in certain circumstances, such as for property investors, people with damaged credit, and self-employed individuals
Some can turn around approvals quite quickly compared to major banks, crucial for deals with an urgent closing date
Rates are often much lower than the major banks, which can translate to lower penalties should the mortgage be discharged prior to the end of the term
Increased pre-payment flexibility
Online access to your mortgage is often provided, as well more convenient customer service options

Your mortgage situation is unique, and every client has different mortgage needs. But all deserve the best rate. We assess each one, quickly and thoroughly, to determine which lender is the best fit — and quite often, we recommend a Monoline lender.