Products and terms
Monoline lender
A lender that only does mortgages, reaches borrowers through mortgage brokers, and has no branches.
Monolines are a large part of the Canadian mortgage market that most borrowers never see. They have no chequing accounts, no credit cards and no branches, so the only way they reach borrowers is through mortgage brokers.
With nothing else to sell you, they compete on rate and terms. Monoline penalty calculations are generally based on the discounted rate you signed at, not a posted rate. If you break mid-term, that's often worth more than the rate difference.
What you give up is the branch. Service is by phone and online, and you can't walk in and sit down with someone. If you don't visit a branch anyway, you won't miss it.
Monolines are regulated, and the vast majority of their mortgages are funded through the same government-backed securitization programs the banks use.
Related terms
Discounted rate
The rate you pay after the lender's discount off its posted rate, and the rate a fair penalty calculation should use.
Posted rate
A lender's advertised list rate, well above what borrowers pay, and the rate some penalties are calculated from.
Interest-rate differential (IRD)
A prepayment penalty calculated from the gap between your rate and a comparison rate, applied over the months left in your term.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
Sharp rates. The full picture.
Ask Daniel about this term
Daniel De Sousa, Mortgage Associate, can walk you through it before you sign anything. Or get a rate quote: 6 questions, about two minutes, and no credit check to start.
No credit check, and no commitment.