Mortgage Brokers Demystified

Unsure what a mortgage broker can do for you? This article discusses some of the many benefits and services provided by mortgage brokers in Canada.

What is a Mortgage Broker?

A mortgage broker is an agent for lenders in much the same way an insurance broker is an agent for insurance companies. Mortgage brokers act as agents for banks, trust companies, credit unions, mortgage corporations, mortgage investment corporations, finance companies and individual private investors. Some mortgage brokers are exclusively lenders of their own money and provide a direct source of mortgage funds. These brokers are trained professionals that have to meet a satisfactory educational requirement before they may become registered. This requirement ensures you with a duty of care, working knowledge of mortgage products and a standard of service to meet individual needs.

How You Benefit by Using a Mortgage Broker:

Using the services of a mortgage broker for the first time usually results in the following:

•   I originally thought you only used mortgage brokers if you couldn’t qualify for one at the bank… I was wrong
•   I didn’t feel intimidated or left out wondering if I would qualify
•   My mortgage was approved the same day I applied
•   My mortgage broker took the time to explain all the terms and conditions in detail
•   I didn’t realize many mortgage products and discounts were available only through mortgage brokers
•   I always thought there was a fee to pay, but my approval was based on my credit history and income, there were no lender or brokerage fees charged
•   I didn’t have to leave my home or take time off work to apply
•   The broker clearly explained the interest rates, prepayment privileges and other important terms and conditions. It cleared up my questions and I saved a great deal of money as a result
•   Within minutes, the broker explained how much of a mortgage I could qualify for
•   Within five minutes, the broker told me I had enough income to qualify for my $160,000 condominium purchase
•   The application process was straightforward and over the telephone
•   I didn’t have to shop around over financial institutions for the best mortgage, the broker did everything and got me what I wanted
•   The broker was always accessible on evenings and weekends when I needed an important question answered before making an offer on a property

What Information Will the Broker Need?

As you probably know, lender terms and conditions are not created equal. If you are purchasing a property or refinancing an existing mortgage, there are many factors to consider. A quick analysis of your personal situation by a qualified mortgage broker lets him/her know where to shop the market. Some things he/she will need to know are:

•   Net worth (i.e. your assets less your liabilities)
•   Income (i.e. income from employment or self-employment)
•   Credit history (i.e. payment history with your other creditors; loans and credit cards, etc.)
•   Property type (i.e. Residential, Land only, recreational, remote location, etc.)
•   Down payment amount

Once your application is complete, the mortgage broker will know where you qualify. They can access a vast network of lenders and brokers. As mentioned above, the broker can obtain rate discounts for you that you cannot obtain yourself.

Where Will Your Next Mortgage Financing Experience Be?

There is an immense amount of information available to consumers right now if you have the desire and time to examine what is available for you. Limit your frustration and consider using a qualified mortgage broker to help you understand the mortgage process and meet your financial needs.