Who is Canada's largest non bank mortgage lender?
1. First National. First National is one of Canada's largest non-bank mortgage lenders, specializing in residential and commercial mortgages. Founded in 1988, First National has grown to become a leading provider of mortgage financing, serving clients across Canada.
| Rank | Lender | Amount |
|---|---|---|
| 1 | Rocket Mortgage | $127,577,235,000 |
| 2 | United Shore Financial Services (United Wholesale Mortgage) | $127,513,645,000 |
| 3 | loanDepot | $52,531,740,000 |
| 4 | Fairway Independent Mortgage Corp. | $40,808,695,000 |
MCAP is the largest independent Mortgage Finance Company in Canada. Our solution-focused approach leverages the in-depth knowledge and market-leading experience of our Commercial Mortgages team, enabling us to meet the diverse needs of our clients.
Who are alternative lenders in Canada? Alternative lending is offered by various financial institutions and companies. These include smaller banks, trust companies, mortgage finance companies, credit unions, and private lenders.
The majority of people looking for mortgages have traditionally gone to these lenders. Institutions servicing an “A” clientele include Canada's major banks (e.g., BMO, CIBC, National Bank of Canada, Scotiabank, RBC, and TD).
Examples of nonbank financial institutions include insurance firms, venture capitalists, currency exchanges, some microloan organizations, and pawn shops. These non-bank financial institutions provide services that are not necessarily suited to banks, serve as competition to banks, and specialize in sectors or groups.
Where do non-bank lenders get their money? Non-bank lenders need funds to lend to borrowers, which they can raise in a few different ways. These include market-based finance, securitisation and through investors who provide peer-to-peer funding.
There are 3 main providers of mortgage default insurance in Canada – the Canadian Mortgage and Housing Corporation (CMHC), Sagen, and Canada Guaranty.
5-Year Fixed-Rate Mortgages
Another option, and the most popular among Canadians, is a 5-year mortgage term. With this mortgage term, borrowers can benefit from predictability and stability by choosing a longer term.
| Lender | Type of Approved Lender | Lending Type |
|---|---|---|
| Royal Bank of Canada | Underwriting & Loan Admin | All |
| Royal Trust Company | Underwriting & Loan Admin | All |
| Scotia Mortgage Corporation | Underwriting & Loan Admin | All |
| Simplii Financial | Underwriting & Loan Admin | All |
Why avoid alternative lenders?
Alternative lenders typically offer streamlined applications and fast funding times. However, for that speed and convenience, alternative lenders often charge higher interest rates.
In Canada, you won't pay a mortgage broker for their services in most cases. Brokers are paid commission directly by lenders. You should only have to pay a broker if your mortgage is challenging or you work with a lender that charges broker fees.
While private mortgages can be a viable option for some borrowers, there are many potential drawbacks to consider. These include: Lack of regulation: Private mortgage lenders are not federally regulated, which means that borrowers have no protection when getting a private mortgage in Canada.
| Some of the more generous mortgage lenders | Deposit required |
|---|---|
| Clydesdale Bank for Intermediaries | 10% deposit |
| Barclays for Intermediaries | 15% deposit |
| Nationwide for Intermediaries | 15% deposit |
| Kent Reliance for Intermediaries | 15% deposit |
United Wholesale Mortgage (United Shore Financial Services) United Wholesale Mortgage is the second-largest mortgage company, originating 348,415 mortgages in 2022 worth $127.5 billion.
Nonbank Borrowers Paid Higher Fees
Nonbank lenders say they offer home loans to people who can't otherwise find financing, often with complicated situations that can add to costs. Yet even among comparable borrowers, those who use nonbank lenders tend to pay higher fees.
Higher Interest Rates:
Non-bank lenders might charge higher interest rates compared to traditional banks, given the increased risk they often undertake. While this can be justifiable for urgent funding needs, it's important to assess the long-term impact on your business's financial health.
Non-bank lenders can't take funds from customer deposits to make mortgage loans as they don't offer checking and savings accounts. Instead, they borrow the money on a line of credit and sell mortgages on to investors. Once they have sold your mortgage, the non-bank lender is not necessarily out of the picture.
The Dodd-Frank Act requires the CFPB to supervise non-banks, including: mortgage lenders loan modification, debt reduction, and foreclosure relief services private student loans payday lenders lenders whose products pose a risk to consumers, and “larger” non-bank lenders, to be defined by the CFPB in consultation with ...
How do non-bank mortgage lenders make money?
They provide alternative financing to real estate investors. Typically, they offer short-term loans to house flippers. Private lenders make money in two ways: 1) origination fees and 2) interest on the loan balances.
Non bank lenders can provide faster approval processes, more flexible lending criteria, personalized service, and competitive interest rates. However, they may also have higher interest rates for some borrowers, less regulation, and a limited range of financial products.
Who are the High Ratio Insurance providers? There are three High Ratio Insurance providers in Canada; CMHC, Genworth, and Canada Guaranty. You can find more info on each of teh insurers websites by clicking on the logos below.
A mortgage must be insured if the buyer makes a down payment less than 20% when purchasing their home. They are also limited to a 25-year maximum amortization period, and the home's purchase price must be below $1 million.
In Canada, mortgages don't need to be insured if your down payment represents 20% or greater. If you already own a home, there are also reasons why your mortgage might not be insured or insurable.
