If you are looking for a mortgage or just where to bank, it may seem like there are an infinite number of options out there and a number of different institutions. One of the lesser known and talked about organizations that are worth considering are credit unions. Never heard of one? Well, here is a quick summary of what it is!
What is a Credit Union?
A credit union is an institution that is similar to a commercial bank, but is a member-owned non-for-profit financial cooperative. This would mean that people that use the credit union also are members and own the credit union as well.
Credit unions operate similarly to banks and provide similar services such as deposit accounts and credit cards. Non-for-profit organizations however are not charities as they do not rely on donations but retain any profit for maintenance. The profit is also shared back with the members in the form of dividends.
Credit Unions in Canada may either be provincially or federally regulated depending on the institution. The Bank Act of Canada is the primary legislation. In addition, the Canadian Deposit Insurance Corporation (CDIC) also insures eligible deposits in Canada of up to $100,000 per insured category. Legislation exists in every province of Canada outside of the three territories.
Examples of credit unions include Desjardins Ontario Credit Union, Meridian and Alterna Savings.
What is the Difference Between a Credit Union and Other Institutions?
Credit unions differ from other financial institutions as those that have accounts are also its members and owners. Their products are also termed differently as well. Share accounts are savings accounts, share draft accounts are chequing accounts and share term certificates are certificates of deposit. Their products also include mortgages and lines of credits as well.
As credit unions are financial cooperatives, the main goal is to provide members the best products and services. Since they are owned locally, profits are given away as dividends to the members, reinvested or given back to the local community. Being part of a credit union, you also will be able to have input into how the credit union is run as well. The board of directors is elected from the membership on the premise of “one member, one vote”. Banks on the other hand are traded publicly and the board of directors are nominated and elected by shareholders.
If you want to know about getting a mortgage with a credit union or need any assistance on your transaction, please reach out to us to find out more. You can call us at 905 787 2296 or email us at info@legaldirect.ca.