CTV morning Live: Mortgage Minute - May 26
Frank Napolitano joins Jeff Hopper on CTV Morning Live to discuss the difference between Banks and Monoline Lenders.
On this week's episode of the Mortgage Minute, Frank Napolitano discusses the difference between a bank and a monoline lender. Monoline lenders deal only in mortgages, and nothing else. Banks may attempt to cross-sell you different products under their product list. A key difference between the two, is how they calculate the penalties for breaking out of a mortgage early. Monoline lenders typically have more aggressive pre-payment privileges as well.
Breaking out of a mortgage early can occur due to many reasons, such as a marital breakdown, health issues or loss of a job. You can expect to pay a penalty for breaking the mortgage, and the way banks and monoline lenders calculate this is very different.
Banks will offer you a discounted percentage off of the bank's posted rate. This discount will come into play down the road if you decide you want to break out of your mortgage, which will result in a much higher penalty, generally thousands of dollars more than the typical monoline lender penalty. Monoline lenders offer you a rate that hasn't been discounted off of a posted rate, but is just as low, if not lower than the discounted rates banks offer.
It is important to discuss all details of your mortgage with a professional. Contact one of our Mortgage Brokers for advice.