Why a Mortgage Broker
Don't settle for less than best!
Your bank might not have the most flexible product for you.
With mortgage interest rates fluctuating so much, homeowners have become more aggressive in seeking out the best possible terms from a mortgage lender. The appeal of a Mortgage Broker, also known as a Mortgage Agent, Mortgage Consultant or Mortgage Specialist, lies in the opportunity to effectively search a large segment of the mortgage industry for the best mortgage loan and mortgage terms, that suit your unique financial situation rather than you personally negotiating with only one or more mortgage lenders. Another primary role of a Mortgage Broker is to comprehensively review the numbers to make you aware of the Mortgage Closing Costs so there are no surprises on closing day.
As a result, the popularity of independent mortgage brokers is growing. Clients using a mortgage broker for the first time, are often daunted and nervous with not dealing with their bank. Once the first experince is completed, clients see the value and generally continue their mortgage broker relationship. Read some our our Client Testimonials about this.
A mortgage consultant can also be a source of information and provide unbiased mortgage advise in wading through the myriad of options available in the mortgage industry today.
✓ Wondering about the advantages of a mortgage refinance?
✓ Want more information on the First Time Home Buyer Plan?
✓ How about advice on adjustable or variable rate mortgages?
✓ Having problems getting a mortgage because you are self-employed?
✓ Need assistance with arranging mortgage financing for an investment property.
These are the kinds of issues that a mortgage broker can help you with, and usually at no cost to you the buyer.
What is a Mortgage Broker (Agent)?
A mortgage broker, mortgage agent or mortgage consultant in some provinces is an independent agent, or intermediary between you the consumer and the mortgage lender. The mortgage broker will shop the available mortgage lenders to find the mortgage loan product that offers the best combination of features, terms and conditions, options and rates to suit your individual circumstances.
What does a Mortgage Broker Cost?
If your Mortgage Broker is working in your best interest, their services should be 100% free in most mortgage applications as the mortgage lenders pay mortgage brokers a finders fee. Your credit history and credit score will determine which bank you can work with and whteher they pay a finders fee or not. Legally we are allowed to charge a brokerage fee on every mortgage. Some brokers will charge a fee on every deal, so ask the questions before you start the application process.
COMMITMENT: My commitment to my clients is that if the mortgage lender is paying us a finder fee, no matter how small, we will not charge a brokerage fee. If the bank is not paying a finders fee and we need to charge a brokerage fee, the amount of the fee will be disclosed up front and I can assure you, it will be less than what typical mortgage brokers charge. I am more interested in a long term relationship through many mortgages, rather than trying to make as much off every mortgage. A client story where the mortgage broker was definitley not acting in their best interest can be read on the Mortgage Blog.
Why not a Bank Mortgage representative?
A bank mortgage representative is known as a Mortgage Development Officer (MDO) and is a person hired by a financial institution (usually a chartered bank) to solicit business for that bank. Although they perform a similar function to a Mortgage Broker, there are some fundamental differences that you should be aware of:
|Mortgage Broker||Bank Officer (MDO)|
|Licensing||Must be licensed with the Financial Services Commission of Ontario (FSCO)||Not required as a bank employee|
|Legal Governance||Governed by the Mortgage Brokerages, Lenders and Adminstration Act (MBLAA)||Governed by the Bank Act|
|Education||Must complete a comprehensive curriculum as authorized by FSCO||No educational requirements. Many bank's offer in-house training|
|Mortgage Products||Multiple Products from multiple lenders||Bank Products Only. Can only sell the products of the bank|
|Disclosure||Are required to provide a detailed disclosure document outlining all the terms and conditions of the mortgage, including all Costs of Borrowing, Effective Interest Rate and Cooling Off Period||Not required to provide a detailed disclosure document. In compliance with the Bank Act, they do NOT disclose effective annual interest rates and are not as comprehensive|
|Reporting||Must maintain all files for review by FSCO for compliance with MBLAA||Files maintained in accordance with the Bank Act|
|Liability Cover||Must have Errors and Omissions and Fraud Liability Insurance||Fall under the Bank Provisions|
|Business Focus||To save clients money and to be mortgage free as soon as. Receiving referrals keeps them in business.||To sell money to make money and keep clients in debt. Selling products keeps them employed.|
While on the surface an MDO performs the same function as a mortgage broker, their ability to widely place mortgages with the best lender is restricted by their terms of employment. They have one product to sell - their employers. Only being able to sell you their products, they are unlikely to advise you that you may be able to get a better deal or approval through a mortgage broker.