Keep your options open when looking for best rates

The mortgage brokerage industry often times takes a lot of heat from the banks – most often from the employees that work at the branch level – as usually their employer (the banks) works with mortgage brokers either directly or indirectly on an investment level.

So it’s nice to hear of an author outside of our industry trumpeting our benefits.

Last year, Bruce Sellery, author of Moolala, says that going back to your bank primarily because you’ve been a customer there “forever” is “zombie behaviour.”

He made these comments while appearing on the Lang & O’Leary Exchange. He added, “A lot of people would say its loyalty. I would say it’s lazy.”

Sellery speaks of getting the most bang for your buck, and seeing what other opportunities are out there for you regarding lenders and rates – it could potentially cost you thousands of dollars for misguided loyalty.

Following are some excerpts from the show:

“You can be loyal to a restaurant you love because they treat you right, but don’t be loyal to your bank because you like the person there…It can make a profound difference in the rate you pay.”

“Mortgage brokers work for you, versus the bank mortgage specialist who works for the bank and offers the products of the bank.”

“Don’t let loyalty trump the interest rate.”

“Banks can be competitive. They have deep pockets. But they are competitive when they have to be competitive.”

You can sometimes benefit from keeping all of your business with a bank but you will have to “fight for” that benefit, says Sellery.

To be fully objective, he did bring up some questions about the mortgage brokerage model as well – understand how brokers make money, he advises. Most brokers make a one-time commission based on the value of the mortgage. They can also receive volume bonuses, trailer fees, and incentives.

“The volume bonuses are…the area where I have the biggest question,” Sellery says. He cites a potential “loss of objectivity” resulting from some brokers’ thinking: “If I hit my volume, I get X.”

All this being said, our job is to look out for your best interest (pun intended), both on the rate side and also on the service side. Do the lender’s guidelines match your needs? Is the rate competitive with everyone else’s?

What other terms and conditions are included? To be fully objective a good mortgage agent will search out all the criteria in the market place and give you the best options out there. All the bank branch personnel can do is provide you with only one option, and that’s their own, whereas mortgage brokers have access to nearly the entire mortgage market for option, and the best part is, our services are free.

Don’t get me wrong, I’m not here to bash the banks, I’m here just to provide the alternative voice to what I hear from many of my clients for what they hear from the branch about our industry.

No doubt the mortgage industry – as has any industry – has some bad apples but they usually stem from either the novice mortgage agents providing poor advice that have come without any prior training other than the course that the Real Estate Council of Alberta provides or unfortunately, those looking to make a quick buck.

The 2009/10 years weeded most of them out.

But like I said in the past, if you are going to hire a professional, do your research, ask lots of questions to ensure sure you get a good one. We aren’t that hard to find.

Jean-Guy Turcotte is an Accredited Mortgage Professional with Dominion Lending Centres- Regional Mortgage Group in Red Deer.

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