Canadian Western Bank
XMC Mortgage Corporation
A mortgage broker is a licensed professional who helps you connect with lenders and find the best mortgage offer based on your financial situation and goals. According to the 2021 CMHC Consumer Survey, 42% of Canadians arranged their mortgage through a mortgage broker and the top reason for doing so was to get a better rate.
Some of the specific tasks that mortgage brokers assist with are:
Mortgage brokers can be a useful service for those who don’t have the time to call around and comparison shop with multiple lenders. They can be particularly helpful to those who are first-time home buyers or new to Canada, and are unfamiliar with the mortgage application process. More complex deals such as a real estate investor owning multiple properties or someone who is self-employed is also best handled through a mortgage broker. Their job is to help you through your mortgage pre-approval process (which sets your strategy from the beginning) and submit your mortgage application to the right lender to help you close on your mortgage. They will convey details of your mortgage, like the terms, conditions, penalties and prepayment flexibility. Luckily with online mortgage brokers, the process is faster and easier than ever before, since the applications can all be done online.
Based on your financial situation and goals, your mortgage broker can help you find the best mortgage rates available to you. With access to all lenders’ rates and requirements, digital mortgage brokers can help you save time by comparing the different mortgage rates between lenders and work with you to build a strategy that fits your unique situation, or where you can compare the latest mortgage rates yourself.
Mortgage brokers will compare mortgage rates from multiple lenders on your behalf and can ask lenders to match lower interest rate offers. You are more likely to get a better deal from certain lenders with a mortgage broker when they are the ones negotiating for you. That’s because they do large volumes with that lender and you benefit from the discounted pricing that broker gets access to. In addition to that, certain brokers will “buy down” the rate, meaning they cut their commission to get you an even lower rate.
With complex borrowing scenarios, you’ll have a better chance of obtaining a mortgage with a mortgage broker since they have access to more lenders, including alternative or private lenders who will only deal with brokers. Banks have a very specific list of things they look for when approving a mortgage and unfortunately a lot of Canadians don’t fit that profile. If you are in a special financial situation where banks will not provide you with a mortgage, the broker can work with private lenders to get your deal funded.
|Mortgage Brokers||Real Estate Agents|
|Helps buyers and lenders connect||Helps buyers and sellers connect|
|Helps their clients find the financing for their property||Helps their clients with submitting a purchase offer or with reviewing offers when selling|
|Advises on financing strategy||Advises on bidding strategy or listing price|
You should always ask plenty of questions to your mortgage broker before you commit to a mortgage offer. However, it is equally important that you are honest with your mortgage broker and answer all their questions truthfully, as the more they know about your financial situation, the better they can advise and assist.
Your mortgage is most likely going to be the biggest debt of your lifetime, so it’s crucial for you to understand exactly what mortgage you are signing up for. Some questions to ask your mortgage broker are:
Getting pre-approved is important and will help you understand your purchasing power and the maximum you can afford. This will also introduce you to all the steps involved in getting your mortgage approved as there are important factors that will come into play, such as your income, employment, credit score, down payment amount and more.
Mortgages take time to obtain so knowing the timeline and the necessary steps will help to avoid unexpected delays. With a trusted mortgage broker, they can help keep you informed and on track.
The right option for you will be a mixture of personal preference and the current economic environment, since mortgage offers can change as often as each day and the value of each option can differ. When you open an account with Perch, our tools help break down the economic value of either option and you’ll also be able to consult your dedicated mortgage broker to come up with a strategy that’s right for you.
There are several ways you could potentially save on interest such as having a larger down payment if you can afford it, or choosing a mortgage offer with flexible prepayment terms. Shop around with your mortgage broker to see what other ways you can save.
You can find lenders with good prepayment privileges so you can pay off your mortgage faster, however, you should be aware of any penalties if you break your mortgage early. Your mortgage broker will be able to provide you with all of these details before you sign.
Closing costs are often overlooked and forgotten about until the closing date. You will want to budget for land transfer taxes, home inspections, lawyer fees and more, so your closing can go smoothly.
Your mortgage broker will know whether there are any limitations of the mortgage, such as the ability to switch lenders or refinance during your term. Knowing this information can help you determine which mortgage terms to look for (or avoid), depending on what you will want to do in the future.
Mortgage brokers work for their clients rather than the bank or other lenders, which means it’s in their best interest to ensure you are always happy throughout the entire process. If a client funds a mortgage with that lender, they are paid a commission (also known as a finder’s fee) by the lender or mortgage provider. Most mortgage brokers do not charge a service fee to the borrower, however it is best to clarify this before working with them.
There are many differences between working with a mortgage broker or getting a loan from the bank directly. One huge difference between working with a bank and mortgage broker is that banks are only able to offer their own products, while a mortgage broker has access to multiple lenders and different mortgage rates. Here are some differences between working with a mortgage broker and a bank:
|Access to multiple mortgage products from a wide variety of lenders||Allow you to consolidate your services and possibly offer discounts for bundling products|
|Possibly offer mortgage rates not available on the market||Only have the ability to offer their own mortgage products|
|Provide personalized, independent advice||May offer a discount on their posted mortgage rates, which you will be responsible for negotiating on your own|
|Will help you negotiate for a better rate||Bank mortgage specialists are not required to be licensed|
|Must be licensed and are required to take continuing education to upkeep their license|
Looking to buy a home, refinance or renew your mortgage? Connect with a Perch Mortgage Advisor today to discuss all of your options. You can also sign up for a free Perch profile and instantly compare hundreds of mortgage rates available to you, all with a few clicks.