Not all lenders are created equal when it comes to mortgages

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When it comes to mortgages, there's more to it then just a good interest rate. says mortgage broker Tracy Head.

Just as no two clients seeking a mortgage are the same, not all lenders are created equal.

For the majority of clients getting the best interest rate is their primary concern. For me, as a mortgage broker, it is as important to find a lender that provides a smooth process from start to finish and excellent customer service once a mortgage is finalized.

What do I mean by that? When new lenders pop into the mortgage market, they often offer low interest rates or better compensation to encourage mortgage brokers to send files their way.

Sometimes, those new lenders are amazing and sometimes, not as much.

Once in a while, more established lenders will offer brilliant rates in order to increase the number of mortgages they have on the go. We see lenders float in and out of the competitive rate market based on how much money they have available to lend at any given time. While this can be great for clients, it can also be a nightmare.

If one lender offers rates much lower than other lenders, they end up flooded with applications. They may or may not have the staff—staff with expertise—to handle larger volumes and increased time pressures.

If I am working on a refinance with flexible dates, that isn’t necessarily a problem. If I am working on a purchase application with deadlines, it can become stressful for all involved.

On top of that, lenders have different processes for handling the legal paperwork that goes to your lawyer’s office. Some lenders handle everything in-house and have very responsive teams to handle getting the documents to your lawyer and addressing any changes that need to be made. Others hire third-party service providers to produce their documents and that adds an extra day or two to the process.

As a broker, I try to learn about my clients’ longer term plans and find the right fit lender-wise. I look at lenders’ policies for portability, pre-payment options, flexibility with respect to their guidelines, broker support and equally, as important client service experience after the mortgage finalizes.

Does the lender have a portal? Will it allow me, as a broker, to help my clients or do they require clients to work with them directly for any changes?

I sent applications to two newer lenders in the last month because they had fantastic rate specials available. Both files ended up being very stressful as we were down to the wire waiting for mortgage instructions to be sent to the clients’ respective lawyers. I prefer not to have to deal with last-minute stress on my files.

Rate is of course incredibly important to your long-term financial health. In my mind, a smooth process before and after your purchase or refinance is also important. There are many considerations that go into choosing the right package for my clients.

My recommendation one day may change the next, depending on both the client’s situation and what I am seeing behind the scenes with various lenders.

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