In the theme of Halloween [OK I know it’s over] a consistent question we receive at Robert Floris’ mortgage architects office is that these small mortgage companies can be scary. Should our clients be worried? The answer should generally be yes for subprime lenders [poor credit and income] and no for prime lenders.

If clients have verifiable income and good credit, we have no problem sending our clients to a monoline lender [small lender]. Here is our thought process:

• More risk on lenders, they are lending the funds to our clients and not taking their cash.
• Better and lower rates save more money.
• Canadian big banks control 60% of the mortgage market. Unfortunately to boost their profits they are the last to raise rates.
• In a recent study by Lowest rates.ca “mortgage rates from Canada’s big banks were consistently more expensive than those offered by smaller lenders”.

It must be said all Canadian mortgage companies should also be reviewed for the following as well as the lowest mortgage rate:

1. Penalties if contract is broken early
2. The ability to port your mortgage
3. Ability to refinance
4. Pre-payment privileges
5. Fully closed terms

We have an easy test for our rigid test. Would I send my mom there? We only send our clients and our business we trust. My colleague Sean had his parents renewing their mortgage. Where did he send them to a small mortgage lender.