The new mortgage laws implemented for 2018 have brought with it an increase in loan rejection from traditional banks: applicants cannot meet the stricter rules and pass the stress test, and as a result are being turned away by their bank for a mortgage. This leaves people searching for alternative options to be able to secure a loan and move ahead with home ownership. One of these alternatives? Credit Unions. Here is what you need to know:

What’s the difference?

Different to banks, credit unions are not-for-profit financial institutions which are provincially regulated instead of federally regulated. As a result, not all credit unions are subject to the strict mortgage law changes, which were implemented in January, and are becoming a viable option to get a loan for the 20% of rejects since the new laws came into effect. While it is indeed a good alternative for many people, in several instances, credit unions are voluntarily adopting the new laws, in the name of sound business practices, as well as in the interest of helping “protect consumers against interest rate variation.”

What are the pros?

Because credit unions are not for profit, they run on a member basis, and you need to join as a member to take advantage of their services. Once you join, you are a member, not a customer. That means you are a part owner and will get better rates and lower fees as a result.  This is great news when it comes to mortgage lending rates.

What are the cons?

One of the downfalls of credit unions, as it relates to home loans, is that not all credit unions are insured – make sure you check into this before you commit to getting a loan from them. In addition, they often have fewer options and services to offer because they are operating on a smaller scale.  This means they may not be able to offer the same loan as what a bank would be able to provide.

What should I do?

Everyone’s situation is different, and just because you may be able to secure a loan from a credit union, doesn’t necessarily mean you should. Don’t let yourself get excited by approval and instead, do your research, consider the pros and cons, and work the math. From there, make an educated an informed decision about the best loan option for you – because it will indeed have a big impact on your future.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Trinity Bellwoods is Our Neighbourhood.

It’s Where I Live & Work.

These are some of the local places I love to visit:

Subscribe to our newsletter.