We are inundated constantly with so much information on so many topics that it can be exhausting to keep it all straight. Add this to the fact that realistically most of us only go through the mortgage process a few times in our lives so you only have to know it very briefly before getting back to real life. On top of both of too much info and not doing it often is the fact that a mortgage involves your home and your finances making it a potential hotbed of stress. It really is no wonder that many Canadians are not totally familiar with what exactly a mortgage broker does and why they should even consider them.
1. What is a mortgage broker? A mortgage broker is an individual who has taken their provincially administered course and passed an exam allowing them to deal in mortgages. From there they are watched forever by their provincial regulatory association to make sure your best interests are always protected. You as a consumer can file a complaint should you need to and I can assure you it is taken very seriously by these associations.
2. What do they do exactly? They take your application and gather all the necessary documentation for the mortgage lender. They submit to the lender they see as having the best product for you and work as a go between you and the lender until they know you have full approval for the mortgage.
3. Who pays them? Usually it is the banks and the mortgage lenders but in some cases you pay them directly though you would know this well ahead of time. The commission a mortgage broker makes is budgeted for by these companies. It is a normal cost of business and can be paid to the broker or to the bank employee and the net effect is the same to you the consumer.
4. Why would you consider using a mortgage broker? They have access to a wide variety of mortgage lenders. Considering that every situation is slightly unique, it can be a relief knowing that if bank A says no to your application that there are many more the mortgage broker can present your application to without you having to make appointments with each.
5. What if you want a bank you know? Mortgage brokers deal with many of the main banks in Canada but often do a much higher volume than you doing just your own mortgage. They can get better rates and often faster turnaround.
6. Are they safe? You bet! This group is watched carefully by the regulators.
7. Aren’t they just for people with bad credit? Heck no!
• Self employed
• Owning more than one property
• Normal folks looking for their best mortgage
• Going through the separation process
• Credit challenges
• And on and on…
Mortgage brokers have made the Canadian mortgage market competitive which means lower rates for you and more money in your pocket at the end of the day. According to a CMHC survey, approx. 51% of first time home buyers chose to go through a mortgage broker. They know the pitfalls you need to avoid. Mortgage brokers are a great resource to save you money both now and down the road as well as saving you time and reducing your stress overall. Considering your debt is the largest debt you will ever take on, it just makes sense to ensure you are getting the best mortgage rate and terms possible for your situation.
Pam Pikkert is a mortgage broker with Mortgage Alliance – Regional Mortgage Group in Red Deer.