Mortgage Brokers - What they do and how to choose one
For many Canadians, realizing the dream of homeownership is an important step in the circle of life. A professional mortgage broker can help.
It is the job of a professional mortgage broker to stay ahead of the game, learning about the array of products available that best suit their clients’ needs. Generally, the broker is paid a referral fee by the lender, not by their client. Lending institutions will usually provide their best interest rates to the broker ensuring that, as the homebuyer, you don’t have to negotiate to get the best rate. In fact, a recent survey by Mortgage Professionals Canada (MPC) has shown that mortgage brokers save consumers money by providing, on average, lower interest rates. According to MPC’s study, those who renewed or renegotiated with a mortgage broker reported an average rate decrease of 1.4 % compared with 1.0 % among all renewers!
By assessing your needs, a broker will carefully weigh important decisions, such as lump sum payments and fixed versus variable rates, before they are made. A broker will also guide you through the process of completing and submitting mortgage applications and supporting documentation required by the lender. If the terminology seems a little confusing, your broker is there to explain important information and conditions set out by the lender as well as any steps required to close the mortgage transaction.
A few things to note about mortgage brokers:
- Mortgage brokers are professionals and many are licensed by the province within which they work. They must maintain a high level of professionalism and keep up with all of the offerings and developments within the industry.
- Mortgage brokers should have an established place of business. They have chosen mortgage brokerage as their career and demonstrate their long-term commitment to the industry. In this regard, they are no different than insurance brokers.
- In order to best meet a consumer’s needs, mortgage brokers have a wide array of products from which to choose – mortgage banks, private sources, independent lenders, etc. And, a lender will deal with a broker only after a thorough selection process, checking references, interviewing and obtaining a copy of their broker licence.
- In addition to the above points and, for obvious reasons, be sure that you have a good interpersonal rapport with the broker you choose. It’s all about trust, credibility and ultimately the relationship.
In short, consumers choose a mortgage broker for four reasons: choice, advice, service and savings. By considering these factors, you’ll be able to make an informed decision, comfortably.
 MPC January 2011 Study – Canadian Mortgage Broker Channel: Consumer and Industry Perceptions