What do brokers do?

Do you have a full understanding of my role as a mortgage broker?

A recent report indicated that 74% of the respondents admitted they had at best only a partial understanding of the role of a mortgage broker.

Here are the top five reasons from the survey for potentially not using a mortgage broker and clarification of exactly how a mortgage broker can assist you.

I don’t want to pay for mortgage broker services

This is the primary misconception about using the services of a mortgage broker. Mortgage brokers are independent and work with many banks and direct mortgage lenders.

The lender pays mortgage brokers on terms agreed upon between the lender and mortgage broker. You are not charged a direct fee for their services.

The mortgage broker works with the lender until the closing of your mortgage and then receives their fee from the lender. Occasionally, a broker fee might be charged in very difficult situations but these fees would always be fully disclosed in advance.

I would rather deal directly with the lender

There are many direct mortgage lenders in Canada that can only be accessed through a mortgage broker. Your mortgage broker will analyze your financial situation which includes your credit and employment history and provide you with your mortgage options.

They will then present your application in the most favourable way to the lenders that the broker has determined will best fit your needs.

They will also clearly explain all of the terms and conditions including how pre-payment penalties are calculated so there are no misunderstandings should you need to exit your mortgage early.

The thought of using a mortgage broker didn’t cross my mind

That is totally understandable. Your first thought is to walk into your local bank to apply for a mortgage because this is your main financial resource. Mortgage brokers are not transactional like your bank and will continue to be a source of information for the life of your mortgage.

Your local bank can offer you decent rates and you may be comfortable with them but financing your home is most likely the largest financial transaction you will ever undertake.

Getting the best possible mortgage can literally save you thousands of dollars so working with a mortgage broker who will explore ‘all’ of the available options for you is a prudent choice.

I don’t want to deal with a lender that I’m not familiar with

The monoline lenders (non-deposit taking lenders) that are only accessible through mortgage brokers are an important part of the mortgage industry in Canada. Their mortgage products and low pricing improve consumer choice and force our dominant banks to be more competitive.

Monoline lenders do not have store front locations so these costs are not passed along to the consumer and as a result they generally offer better interest rates and lower penalties should you decide to pay off your mortgage.

They source their business through mortgage brokers and can have more flexible lending programs than the major financial institutions.

I don’t understand what services mortgage brokers provide

Mortgage brokers provide you with more choice as they have access to a network of many lenders that offer different products and services providing you with objective recommendations for your financing options.

Mortgage brokers have access to the best rates and negotiate on your behalf to ensure you receive the best terms on your mortgage for now and into the future.

Mortgage brokers are professionals that have on-going educational requirements to ensure you are always receiving the best independent advice.

If you would like to learn more about how as a mortgage broker I can assist you with finding your best mortgage options, please give me a call at 1-888-561-2679 or email [email protected] 

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.