If you ask a mortgage broker “Why should I use a mortgage broker?” you had better clear your calendar for the rest of the day. A good mortgage broker knows and can clearly define the many benefits they can provide their clients.
I for one am definitely passionate about what we do and the great service we provide Canadian borrowers. In a world where Big Banks influence governments and economies, I love being an advocate for individuals in need of a mortgage that benefits them now and into the future.
However, for the sake of this blog post I’ve tried to keep things concise and focus only the five key reasons (in no particular order) someone should consider partnering with a mortgage broker.
MORTGAGE BROKER: PROVIDING CHOICE
Choice enables Canadians to select a mortgage that suits their needs rather than being force-fed a single option. On a more macro level it also promotes healthy competition between lenders, helping to keep pricing down and mortgage terms borrower-friendly.
Banks understandably are limited to offering their short list of mortgage products and try to squeeze you into one of their options regardless of whether it’s really the best option for you. Brokers on the other hand learn about your needs first and make lender/mortgage recommendations based upon that as well as their knowledge of the many options available (various banks, credit unions, mono-line lenders, etc).
The fact that a broker doesn’t work for, or have an allegiance to a particular bank allows them to give you unbiased advice. Remember… no rep from RBC will ever tell you that their best mortgage option would be a product offered at Scotiabank.
MORTGAGE BROKER: DIFFERENT BUSINESS MODELS
Simply put, banks make money by charging interest to customers. The higher the rate (interest) they charge clients, the more profit the bank earns. On the other hand mortgage brokers are paid a commission from the lender selected by the client regardless of the rate a client secures. This means that a broker can focus on securing the best rate with the best terms available rather than worrying about hitting monthly targets and maintaining certain profit margins like someone would have to do at a bank branch. Simply put… our job is to get you the best terms at the best price and when we do that, we both win.
EDUCATING VS SELLING
When it comes to mortgages, Banks focus on one thing…Selling Rate. They dumb it down so they can focus on selling a number rather than educating you, the client, on the details of the mortgage. This gives people a false sense of knowledge: they think that if they research three different banks and choose the lowest of the three rates, then they have the best mortgage for them. This often is SO FAR from the truth. Many banks offer teaser rates, collateral charge mortgages or mortgages with restrictions and penalties that can cost clients thousands extra in the end. The best brokers offer the best rates but more importantly educate their clients so they can make their final decision based on all the facts… not just looking at a percentage.
MORTGAGE BROKER: ONGOING MANAGEMENT OF THE MORTGAGE TO SAVE CLIENT MONEY
As I mentioned earlier, brokers get paid a commission from the lender at the time of funding. A good broker does their best to keep client options open and is always looking for ways to save more money – beyond the initial mortgage closing.
For example: You are 2 years into a 5-year mortgage, but the broker has another lender offering a great deal. Your mortgage broker will work to switch you into the situation that saves you the most money, regardless if it means changing lenders. Conversely, bank reps (that want to keep their jobs) would never call up client mid-way through a term and advise them to switch to another bank with a better rate or take a lower rate with their bank so the bank can make less money. It would be completely against their business model of making money by charging interest. A good broker always has your best interest in mind and doesn’t check out after you have signed on the bottom line.
MORTGAGE BROKER: LEVERAGE
Because traditional lenders know that brokers have access to typically 35-60 lenders across Canada they know that they need to compete if they want the recommendation. This is done by offering sharp pricing and good terms knowing that good brokers diligently review everything and compare all the options.
Banks on the other hand know that if you have a chequing account, a car loan, a credit card and a mortgage with them, the likelihood of you leaving to get a mortgage elsewhere is less than 10%. This is exactly the reason banks will rarely offer those renewing mortgages their best rates (those are saved for wooing new or transfer clients).
OK, OK… so you probably think that I’m biased about the amazing benefits of mortgage brokers because I am one. And while you might be right… I challenge you to talk with me about your current mortgage and I bet if I can’t at least show you a better option, I can talk with you about maximizing the mortgage you have! I’m always available to answer any questions and look forward to talking with you about the industry and how you can make it work for you!
Contact the HW Advantage today by filling out the form below or calling 1-905-541-6961: