Know the limitations of credit unions

Credit unions are slowly earning their chunk of the mortgage market, but brokers warn investors and homebuyers about the potential pitfalls of not knowing the limitations and carefully reading the fine print.

“When it comes to porting, a mortgage credit union has one big disadvantage: If you have to move out of province you will not be able to port your mortgage and will have to pay a penalty to break the mortgage,” one broker wrote on CREW's sister site,

“Also, [with] some [credit unions] you have to live a certain distance from the nearest branch. If there is no branch near your new home, you will not be able to port your mortgage.”

Credit unions currently account for six per cent of mortgages funded in Canada, according to CAAMP's most recent Annual State of the Mortgage Market in Canada report.

And while they may be growing in popularity, brokers have mentioned the potential shortfalls of the mortgages on offer from certain companies, including refinancing and porting limitations.

However, as one reader points out, these limitations aren’t ubiquitous across the channel and it’s all about doing your due diligence before closing the deal.

“Some credit unions do operate in more than one province," a broker wrote on "Credit unions also have much more flexibility than a bank or monoline does, and offer commonsense in a banking industry that has lost that.

“I have worked for banks, credit unions and as a broker; credit unions are my choice over monolines or banks any day.”

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  • by Andrew Crosby 2015-03-04 12:10:35 PM

    I work for a Credit Union.

    And it's true that with many Credit Unions you may be unable to port your mortgage to another province and this is important for some consumers -- especially those who know they are likely to be moved such as those serving in the RCMP or Armed Forces. However for many more consumers the likelihood is not that you will move provinces, it is that you will move within your province. And when you do you may still find your lender won't qualify you to port your mortgage (because you still have to qualify!). The reason is the "one size fits all" lending policies of the big banks and monoline lenders are designed for efficiency and profit -- not to help you achieve your goals and save you money. Credit Unions, with their local knowledge and decision making, are often more willing to find a way to help you port your mortgage to the new house -- especially if that home includes rental income, is a new home under construction, or you are a self-employed person.

    So this article is not wrong in saying a Credit Union might not be the right fit for your mortgage -- it just misses the mark on pointing out the reasons a bank or monoline lender might also not be the right fit for you. So chat with your banker, and chat with your mortgage broker, but don't miss the opportunity to chat with a local Credit Union too -- it might just be the best option for you!

  • by Wm B. Williams 2015-03-12 11:48:54 AM

    I guess credit unions don't pay commissions to mortgage brokers for bringing in new business?

  • by LF 2015-04-09 12:26:32 PM

    Yes! Wm B. Williams, there a lot of credit unions that do pay commissions to mortgage brokers for bringing in new business. As a mortgage broker I can say that some credit unions are great partners for the broker community as they will look at the "make sense" aspect of lending that is outside the big bank box! We love credit unions!

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