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Why Use a Mortgage Broker?
For most of us, our ideas about
mortgages have been instilled by years
of past experience with traditional
products in traditional institutions.
Long-held beliefs sometimes include the
idea that mortgage brokers are only for
people who have bad credit or were
turned down by a bank. Unfortunately,
anyone with this kind of outdated
thinking could be losing thousands of
dollars!
All homebuyers and homeowners can save
time and money by enlisting the services
of a broker.
A mortgage broker has access to many
competing lending institutions,
including banks, pension funds, trust
companies and even private individuals.
Since mortgage brokers do not have to
sell the products of any one lender,
they can be completely unbiased in
recommending a mortgage that has the
most attractive rate and features for
their clients. While you may arrange a
mortgage every five years, a mortgage
broker and his or her firm are
completing thousands of mortgages each
year. This enables them to negotiate
better interest rates based on that
volume, which can be passed on to their
clients.
There are other potential cost savings.
On any given day, a particular lender
may have a special rate offer for a
specific mortgage term. If you are rate
shopping on your own and don’t know who
is sponsoring the offer, you can’t take
advantage of the special pricing.
At renewal, many homeowners take the
renewal quote and choose a term and rate
offered by the lender without realizing
that a mortgage broker may be able to
save them up to one percentage point off
the posted rate. This can translate in
thousands of dollars in savings over a
five-year term. To ensure you get the
best rate, it’s best to contact a
mortgage broker at least four months
before you renew or consider a new home
purchase. Starting early can be a money
saver because your broker can usually
guarantee an interest rate for 90-120
days. Should rates drop in the meantime,
you would of course get the lower rate.
If your credit rating is important to
you, then you also need to consider that
when you shop from lender to lender,
there is an accumulation of inquires on
your credit bureau report, affecting
your credit rating and ultimately the
rate and terms of your mortgage. This
isn’t the case with a mortgage broker
who only does one inquiry yet can still
get many competing lenders to quote on
your business.
And finally, an important misconception
that should be discussed – fees. Some
people think that using a broker will be
costly, and that there will be an
upfront fee. In most cases, there is no
fee because the lender that provides the
mortgage pays the mortgage broker a fee
for originating and negotiating the
mortgage. As you would expect, a fee may
still be charged to clients with
impaired credit, or when private money
is used, although this compensates for
the time and effort required to
negotiate the mortgage.
To find out more, visit the Canadian
Institute of Mortgage Brokers and
Lenders (CIMBL) Web site.
www.cimbl.ca.
If your mortgage is coming up for
renewal soon or you’re considering
purchasing a new home, you may want to
consider enlisting the help of a
mortgage broker. If you don’t know a
mortgage broker, we would happy to
recommend one or two to you. Please
call our office at 604-737-8886 or
email
us.
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