Why NOT using a mortgage broker can COST you big time!
February 27, 2018 | Posted by: Allison Kurys & Kim Owen
If you’re thinking about buying a property, or your mortgage is renewing, or you're a real estate industry professional (Realtor, real estate lawyer, appraiser, etc), you should consider speaking with a mortgage broker instead of walking into your local bank branch. In short, there is no downside to speaking with a mortgage broker, and you could save thousands and thousands of dollars.
Here are my favourite reasons why you should speak with a mortgage broker:
1. Expertise and specialization
Any mortgage broker you work with should have detailed knowledge of the mortgage laws, stress tests, ratio requirements and specialized lender policies. This means they are not selling mutual funds, RSPs, TFSAs, RESPs and more - they are focused on mortgages. Although mortgages seem simple, they are actually technical products. A great example of specific knowledge (that many don’t know about) is that if your current mortgage is coming up for renewal, and you funded the mortgage before October 17, 2016, there is a good chance you can get access to amazing rates on the renewal - but only if your mortgage broker understands these technical elements and how they unlock unexpectedly low rates!
2. They work on commission
Some people view commission as a bad word, but if you diagnose it, it is actually a benefit for the client. As a commission-based mortgage broker, I know my clients and my reputation is everything. This means I answer phone calls and emails during the evenings and weekends. I know my lenders and mortgage laws very well and I’m dedicated to my clients. Why? Because I know that if I do a great job, as a small business owner, I will be rewarded with referrals and more business. And if I don’t respond to emails or calls or don’t explain things, I will not get referrals. It’s simple if you think about it. I am committed to the process - I am not punching the clock at 4:25pm on a Friday.
3. No fees (usually)
There is a misconception that mortgage brokers charge fees. This is largely false, as the lender pays our commission. There are a few exceptions, like if the client needs certain types of mortgages (construction; commercial; bad credit; stated-income/bank deposits; private lending; etc) - but most people do not pay a fee.
4. My favourite - Access to countless lenders
When you walk into a Honda dealership, the staff will be pleased to sell you a Honda. They will not tell you that Acura is on sale, or that you might be better suited to a Lexus, or that Honda had a major safety recall recently. Similarly, when you walk into your local bank, they will sell you the mortgages that they can offer from that bank. They might not explain technical terms like Interest Rate Differential (IRD) or collateral mortgage - even though these can be tremendously important mortgage features. You probably know that a Jeep is great for offroading and BMW is great for performance. Similarly, different lenders are better at certain situations. For example, some are better at self-employed (because they allow you to add back your car depreciation and home office expense to boost your income). Others are better for new-to-Canada, or rental properties. One size does not fit all. Perhaps the best example is that mortgage brokers have access to provincial lenders and credit unions that offer great rates but do not need to adhere to the recent stress test!
5. Because of their relationships, mortgage brokers can often get you better rates at your own bank than you can
It’s funny - many Canadians are loyal to their banks, but are the banks loyal to Canadians? I’ve seen many clients who have had a ‘relationship’ with a Big Bank for 10 or 20 years, only to get declined for a mortgage. Or they get a $20,000 mortgage penalty. Or, they get offered high rates which any mortgage broker can beat. My last clients were a married couple who worked at BMO and Scotiabank, but they still came to me - even with their employee pricing!
6. Your mortgage application and docuements can be reviewed in detail before a purchase, saving you time and hassle.
Document review is huge and can help to reduce stress, errors and costly mistakes!
7. Mortgage brokers pull only one credit bureau and shop many banks, thus not affecting your credit score.
Many Canadians are protective of their credit score, and a broker can use the same credit bureau for multiple lenders.
8. Ongoing support and relationships
If you have questions about refinancing, or if you need another mortgage (eg. for a cottage or investment property), you can call your mortgage broker and expand your existing file
9. Zero downside
You can always go back to your bank before the closing date if you’re not satisfied. Yes, if your mortgage broker does not provide the service you expect, you can generally go back to your bank to get the mortgage