Imagine that you are in a room with a trusted friend who cares about you and your family and has a great knowledge about mortgages. Now, imagine others entering the room that are mortgage representatives from the entire major lending institutions in Canada. They are there to consider your mortgage application. One by one, they bid on your loan. Your friend continues to encourage them to improve their rates and terms. Those who come up with the most attractive rates then begin to explain what is special about their mortgages.
After carefully considering what terms and options are important to you, and keeping in mind the best rates, your friend will help you choose the lender. The experience was friendly, quick and didn’t cost you anything. Your friend in the room is your Home n Work mortgage broker who is there to ask the right questions and negotiate the best deal for you.
BACKGROUND
Historically, mortgage brokering as a profession arose in the 1960s to meet the demand of consumers who did not qualify for a mortgage from their bank. Traditionally, brokers assisted those individuals for whom mortgage financing was unobtainable – either because they were self employed, had poor credit or for any other number of reasons were considered an undesirable risk by the bank. The brokers were largely viewed as a ‘last chance’ opportunity for bottom of the barrel clients who had to pay high rates and fees.
Those days are no more! Brokers have had such a positive influence on the industry as a whole. Over time, deregulation allowed consumers greater choices and options, and brokers were able to begin offering the general public mainstream mortgages. Many lenders found it less expensive to deal with a mortgage broker rather than invest in a large branch network to deal with consumers directly. Accordingly, they began to offer brokers “finder’s fees” for prime mortgages placed with well-positioned clients. The subsequent discounting put pressure on all lenders to compete by lowering their rates and improving their service, thus benefiting consumers everywhere. The contemporary mortgage broker has so much more to offer their clients than the clerk at the bank.
EDUCATED, CERTIFIED AND LICENSED
In British Columbia, we are government licensed. While employees of banks and financial institutions do not need to comply with any mandatory education requirements or obtain a government license, mortgage brokers do. We complete mandatory industry and finance courses at UBC and must pass a rigorous exam. We are then licensed by the government, by a process that includes extensive background and criminal record searches. We abide by the Mortgage Broker Act and Regulations, which include stringent ethics and confidentiality protocols. By breaking these, or even stretching them, we risk losing our license. Many of us also belong to professional associations such as the Mortgage Brokers Association of BC or the Canadian Association of Accredited Mortgage Professionals. For us, this is a profession, a career in which we take great pride and build a business for ourselves.
EXPERTISE
Unlike the staff at your bank, we do one thing only, and hence we do it well: mortgages. We don’t want you to move your bank account. We don’t want to sell you investments, RRSPs or foreign currency. We don’t get shuffled around from department to department, but rather develop specialized knowledge in the area of lending and borrowing. Reputable brokers have one goal, and that’s to get you the best mortgage possible. As specialists, we have a thorough understanding of the mortgage market, all the available lenders, options, features and rates. It is what we do each and every day. Our comfortable familiarity with “everything mortgage” allows us to be a complete resource of information to our clients. Good brokers are well equipped to ensure that their clients know exactly what’s going on, every step of the way, and ensure they know exactly what they’re getting into.
INDEPENDENT
We offer absolute and unbiased advice. We are not employed by a particular lender, so we can consider all of them, based on merit and performance, not for any other motive. Because we are not limited to the loan options and guidelines of any one bank or lender, we can freely shop them all. As your personal mortgage shopper, we have instant access to all the best rate sales, specials and promotions. The clerk in your bank is not going to tell you that the bank down the street has a limited time rate special, or that another has a promotion this month for free legal and appraisals! As your mortgage consultant, we work for YOU. We will argue your cause and negotiate to get you the very best rate.
FREE
In Canada, mortgage brokers are paid directly by the lender. So except in very complicated cases of challenging specialty loans, there are never any fees for our services. If you should happen to be in a unique circumstance, any fee would be disclosed and discussed before any work commenced. That would be unusual. Normally, we receive a referral fee from the lender, and this compensation is calculated on the amount that you borrow and for what term, not the interest rate that we negotiate on your behalf. This means we have every reason to get you the best rate possible. We have access to every major lending institution in Canada. When lenders compete, you win!
WHOLSESALE RATES
As brokers we have access to wholesale lenders that do not even deal with the public. They only deal with brokers. Wholesale lenders don’t have the financial burden of expensive retail branch networks. These savings are passed on to you, the borrower, in the form of mortgage rates that are considerably lower than the retail rates you would obtain at your bank. Even the major banks, which tend to offer fairly similar rates, occasionally have ‘rate sales’ that are not advertised to the general public.
CONVENIENCE
You don’t have to stand in line to see your mortgage broker! In fact, you likely don’t need to go anywhere at all, we will typically come to you or meet you somewhere convenient, at a time that suits your schedule. This might be an evening or a weekend. When was the last time you called your banker on a Sunday afternoon? Most mortgages can be first arranged with a phone call or over a coffee.
MANY CHOICES, ONE CREDIT CHECK
There is no doubt that your own bank might give you the plan you want at a competitive rate. However, this is just a chance. You will only know if it’s anything more than a chance by actually looking elsewhere. You could go to other banks and lending companies that deal with the public... but in addition to being time consuming, stressful and overwhelming, each one would want to ‘pull a credit report’ in order to obtain your credit score, so that they know what interest rate you qualify for. Multiple hard-inquiries on your credit bureau will have a negative impact on your credit score. On the other hand, consumers that work with a mortgage broker know that only one application is required, only ONE credit report is pulled, and that it will be good for over 40 different lenders.
SPIT AND POLISH
We are professionals and we know exactly what the lenders are looking for in a successful mortgage application. We will prepare you, help you assemble all the necessary documents and then present your application in the best light possible for approval. If there are any weaknesses in your profile, we are in a good position to help you overcome them, emphasizing the strengths to the lender that mitigate any challenges. We are motivated to get you approved, that’s how we get paid!
INNOVATIVE PROGRAMS
A broker will normally collect all the information from a client and then search for the lender who can provide the best product for the best rate with the fewest complications. Sometimes a borrower might require more flexibility than is offered by conventional financial institutions. Perhaps the application is challenged with bruised credit, the applicant might have very little in the way of a downpayment, or perhaps the applicant is self-employed and ‘writes off’ most of their income as expenses. Even though these people would often be turned-down at their bank, there are actually lots of lenders out there with specific programs and loans tailored just for these very populations. Mortgage brokers are industry and market experts, and thus are knowledgeable about the programs of multiple lenders. We understand both how and where a loan can be done, and can guide you to the right source.
SATISFACTION
The market share of loans placed by brokers rises every year. People like their brokers! They use them again and again, and refer their family and friends. As expected, brokers place the overwhelming majority of alternate and private mortgages. However, the mortgage broker channel also accounts for about one-third of all residential prime mortgages originated in Canada every year. This number jumps to 44% for first time homebuyers. Discover what clever consumers already know..... Smart people use savvy mortgage brokers!
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