Why you should use a mortgage broker.

http://www.bc-mortgage-brokers.ca/getting-your-mortgage-from-a-mortgage-broker-vs-the-bank/

Getting Your Mortgage From A Mortgage Broker vs. The Bank

Why should I Get My Mortgage from a Mortgage Broker?

There is a question that I am often asked when I meet a new client for the first time.  It is often something like this: what advantages do I have in dealing with a mortgage broker instead of my bank?  I then tell them many reasons that it is advantageous to work with a mortgage broker instead of the bank, and I have at many times thought “There must be many different people wondering this question, maybe I should write something about it.”
In commemoration of my shiny new mortgage website, I decided to stop procrastinating and put all my thoughts to paper in a very real way.  So, this will get to the heart of my thoughts unlike some fancy marketing material that most brokerages will provide (yes…that is my company website).
Before I do, I must also state that I also have banks and credit union lenders available to me, and there are certain situations where it is best for me to place them with those institutions.  It is not my intent to slam those institutions, and really they will do what they are allowed to get away with, and the onus is on people to be aware and prepared.

Mortgage Brokers Will Save You Money

Most often, mortgage brokers will have the lowest rates available for fixed rate and variable rate mortgages. It is not quite how it appears on mortgage broker websites though, with the broker claiming that the banks offer posted rates when they do in fact offer discounted rates. The reality is that the banks are competitive with rates, even if they are not the best in the market.
However, the REAL advantages of saving money come from other aspects of arranging a mortgage.  I am of the opinion that these tactics that many of the banks often pull are “dirty”.  Make no mistake, they are not there for the client’s benefit.  Here are some of the tactics I have seen or heard about:
For example, when someone gets a mortgage from a bank to buy a home and they are a new customer, they will often be enticed by a good interest rate, very competitive with what my lenders will offer.  It is a commonly known fact that in the mortgage industry that, when the mortgage comes due for renewal, about 70% of people will just sign and send the form back in to renew without comparing rates.  Often out of just the convenience of renewing easily, they do not bother to see if they can do better for themselves.  This is one situation where the banks will use the posted rates that are usually listed on mortgage rate sheets!
In contrast, most of my “A” mortgage lenders do not have posted rates at all…the rates they offer are usually equal to or lower than banks “discounted rates”.  When one of my lenders sends you a renewal, the rate they offer you is almost always what they are offering to the public at that time via mortgage brokers like myself.  If you wish to renew at that time, you are receiving a rate based on a transparent, open and honest policy.  You are a valuable customer to them even after they have your business.

Be Careful with Variable Rate Mortgages!

Related to the first point, if you obtain a variable rate mortgage from a lender, one of the privilages you are allowed within the mortgage contract is to lock into a fixed rate at a time of your choosing.  If you are with a bank lender and decide to do this, however, they will offer you a posted rate to convert to a fixed rate mortgage.  Posted rates are typically 1%-1.4% higher than discounted rates that are always offered by most of my lenders.
In contrast, my mortgage lenders again offer my clients an open, transparent policy of providing the same fully discounted mortgage rates that are offered to the public via mortgage brokers.  This will save you a lot of money in the long term, and is often not a consideration thought about when seeking an approval.

Save Time on Searching For An “A” Mortgage rate

Despite the growth in the mortgage broker industry in recent years, many people still don’t understand the role of a mortgage broker.
Here is an analogy: you decide you want to go to Hong Kong to do some shopping, but you have never been there before and you have no idea how to get around or the best places to go.  You can go place to place yourself and take a guess at what place offers the best deal and what lender offers the best quality and value, or you can have a local to help you.  Someone who knows the area, knows the shops, and can help you find what you are looking for quickly and easily.  Further, you do not have to pay for their help, as they receive a commission from the shop for bringing you there.
This is a good analogy to explain what a mortgage broker does, except that the mortgage broker industry is tightly regulated.  There will be examples of dishonest mortgage brokers out there, however it is no different than the banks, for example here and here.
When working with a mortgage broker, you have an expert on your side at knowing who is most likely to approve your application and who will do their best to give you the best rates. Best of all is that it for most mortgages we receive compensation from the mortgage lender, and you do not have to pay any fees, just like when you get a mortgage from a bank.

Your Credit Rating and HELOC Mortgages

You have spent a lot of time developing a good reputation for being able to borrow money.  You make your payments on time, you earn an honest living and you are careful with money.  You have some equity in your home and you make the decision you want to be able to access some of the equity in your home.
Many financial institutions offer Home Equity Line of Credit (HELOC) mortgages, whether they are called a “Homeline Plan”, “Scotia Total Equity Plan (STEP)” mortgage, etc.  In Canada, normal mortgages are not reported on the credit bureau. However, HELOC mortgages are.  Try and imagine the impact that a maxed out loan for the amount of your mortgage will have on your credit.  Approximately 30% of your credit score is attributed to how much you have owing on your credit bureau and the proportion of your credit balance to your credit limit.
Let us pretend for a second you have $15,000 of unsecured debt normally reporting on your bureau and total limits of $30,000.  That is 50% credit utilization on a total debt of $15,000.  That is a reasonable number and will be reflected in your beacon score.  However, if you add on a $300,000 mortgage including a HELOC mortgage it will show a maximum limit of $300,000 and a balance of $300,000.  Added to the above you are showing total debts of $315,000 on a total credit availability of $330,000. This can very much effect your score.
Why does this matter?  I myself, if I was an outsider would believe that the low score is quite explainable under these circumstances and that when applying for credit in the future that the financial institution would understand…
This assumption is WRONG…unfortunately for myself who has had many mortgage applications that “make sense” only to get a decline.  Most financial institutions including the banks and mortgage companies have investors that invest in these mortgages after they are funded.  These investors oblige all the mortgages in a portfolio they are invested in to meet certain criteria.  Essentially, mortgage criteria has to fit in a box for it to be a qualifying investment.  Most of the time, I do not get an exception for these kinds of mortgages.
All the banks report any mortgage with a HELOC attached to the credit bureau agency. However, I have lenders available who DO NOT report HELOC mortgages on the credit bureau.  This is a much more desirable situation to be in.

Creative Mortgages That Help You!

I am often making suggestions to clients to help them finance or improve their finances that are at least somewhat “out of the box thinking” solutions that clients virtually never will receive from the bank.  One example of a solution that I offer that is not available from the banks is a program to make your mortgage tax deductible called TDMP.  This solutions is capable of allowing you to be able to pay off your mortgage over 10 years faster than traditional payment without you spending any more money on mortgage payments!
This is just one example of the many ways in which I as a mortgage broker provide value to my clients.

Mortgage Life and Disability Insurance

Many people choose the optional life and disability insurance that is offered to them with their mortgage.  Banks and mortgage brokers both provide this service.  However, the coverage provided by a bank is only good for mortgages provided by the bank.  In other words, it is not portable if you wish to change institutions.
This can prove to be a real challenge to some people, particularly if they have had health issues since obtaining their policy.  It often means they cannot leave their current mortgage lender even if that lender does not offer them a good mortgage rate because it would mean having to re-qualify for a different mortgage insurance plan and being subject to either higher premiums, or being refused coverage completely.
With a mortgage broker, this does not happen because our mortgage life and disability insurance is portable.  This allows someone who has this mortgage insurance coverage to change lenders and obtain the best rate available and still keep their mortgage insurance coverage.  This flexibility to have your mortgage where it is best for you is just another transparent aspect of financing your home with a mortgage broker.

Don’t Wait, It’s Easy To Work With A Mortgage Broker

I am very accessible to my clients, and can meet you at a time and place convenient for you.  You do not have to come to a branch to meet with me.  I am responsive in returning telephone calls and am available on evenings and weekends.  Please take one minute to complete some basic information below and I will be in touch with you very shortly.

For more information or to get started with your next  or first real estate investment contact:

Anne Brill
Centum Metrocapp
(416) 289-2224