In the past, those in need of a mortgage turned almost exclusively to their banks, however there are now far more options at your disposal with the growing presence of mortgage brokers in Canada. Mortgage brokers are licensed mortgage specialists who have access to a wide variety of lenders and mortgage products, and act on the borrower’s behalf in finding the best mortgage products and rate available on the market.
To this day, about two-thirds of borrowers still receive their mortgages from the bank, however that number is decreasing as each year passes by. With online information being more available than ever, borrowers are increasingly realizing that dealing with a mortgage broker will often save them time, frustration, and in many circumstances, money. Let’s take a look at the advantages and disadvantages of going to your bank vs. using a mortgage broker:
Banks are typically local brick-and-mortar financial institutions that offer mortgages as well as many other traditional banking services, such as checking and savings accounts, car loans, and credit cards, along with other financial services such as wealth management and investment vehicles.
Mortgage Brokers are licensed individuals who sell mortgage products on behalf of lenders. They facilitate your search for the most suitable mortgage product and structure your loan to suit your financial needs. Brokers do not provide the loan themselves, but rather outsource your file to the lender, who then approves and provides the funds for the mortgage.
Why can Mortgage Brokers often get better rates for borrowers than the banks?
There are a few different reasons this often occurs. Firstly, the banks spend billions of dollars a year advertising, which gets passed along to the client in the rates they offer, whereas many of the non-bank lenders that brokers have access to only advertise to the brokering community. They count on brokers to provide them with the business, and as a result, they can offer better rates to borrowers.
Secondly, bank employees get bonuses if they sell higher rates, giving them added incentive to do so. It takes a lot of negotiating on the borrower’s part to whittle the banks down to their lowest rate available, whereas a broker will typically offer the best rate and mortgage product up front to the client. Moreover bank employees are paid by salary and commission, so they typically don’t have as much to lose by not gaining your business.
Brokers, however, only get paid by commission if the mortgage closes, giving them far more incentive to make sure they get your business and provide you with the best service possible. They are not only thinking about this mortgage, but hope to provide you with a positive experience that will result in both repeat and referral business in the future.
In many cases, the banks even offer a borrower a particular mortgage product with a higher rate than what a broker would be able to get the client from that exact same institution via their broker division. The reason for this is because the banks offer their best rates up front in their broker divisions, instead of trying to sell the highest rate possible to unsuspecting borrowers that may not have the full knowledge of the industry and current rates available.
Contact MortgageMeister.com today to speak to one of our mortgage professionals. We’ll take care of your financing needs from start to finish, all from the comfort of your own home, while offering you the best rates and mortgage products right from the start – no haggling like at the banks. We do that for you!