There are a number of different mortgage lenders in Canada and it pays to know what the differences are. This article will run down through the different types of lenders.
Big Five Banks
Canada have five world class banks that essentially reach across Canada. They tend to lend to deal with a large amount of different types of bank business, including commercial lending, credit cards and current accounts. If you live near a town you will almost always have a branch near you, and you may have already had dealings with them.
The Big Five banks have become far more competitive in the last twenty years, but there are still disadvantages of dealing with them. As with all large companies, if you have dealt with them then you may not get the service that you are used to. It may be better or it may be worse, but different sections of the big banks can tend to have a very similar culture.
Second tier national Banks
Not all second tier banks are small. For example the National Bank of Canada, ING Bank of Canada and HSBC Bank Canada and are a big presence across Canada. These banks are often quite hungry and want to break into the Canadian market with foreign money. They will often offer some very competitive deals.
There are plenty of regional banks in Canada that may be reasonably big in one area but unknown next door. By their nature the coverage will be patchy. This can be a problem if you are moving into a new area, as you may not be as fully aware of what the options are.
Some regional banks can be stuffy throw backs if not to the 1950s then to the 1970s. Others can be sharp local players with an unrivalled knowledge of local conditions, including your neighbourhood and your employer. Many will be a mix of the two. Again you are unlikely to get the best deal from these places, but if you value a personal service then these may be worth it.
Credit unions were founded to give access to reasonable credit. Most of them have always had mortgages as an offering. In most cases you will have had to be a member of the credit union for a period of time, and this can differ from union to union. You will also find that many credit unions are regionally based. However if you do get through this then they are not aiming to make a profit out of you and you will often get a good deal – although they can be risk averse.
Many of the larger credit unions will have a specialist mortgage lending arm. The Mouvement Desjardins is often not thought of as a credit union but it is in fact a federation of predominantly French speaking credit unions. Although strong in Quebec it has a presence in other parts of Canada and has a specialist mortgage lending arm, and you don’t have to speak French to get a loan there.
There are some specialist lenders who aim at a certain slice of the market, often those who have trouble getting mortgages such as people with a bad credit history. These will rarely have a branch presence and can be found through the internet or through using a mortgage broker.
Canada has an open banking system and so a lot of banks, particularly from the United States and Great Britain, have subsidiaries or branches in Canada. They will often have a presence in the bigger cities. Although some of them like HSBC and ING are aggressive mortgage players many of them are not interested in mortgages at all.
Intermediaries – Mortgage Brokers
Mortgage brokers aren’t strictly speaking mortgage lenders, but they are the people who will try to find you a mortgage from someone else – for a fee. They will often have deals only available to mortgage brokers, and are paid to know about the mortgage market full time. Although it is possible to find a better deal (as some mortgages are only available directly from the bank) they are often a good choice if you have come across problems getting a conventional mortgage or you are not confident with doing financial research.