A mortgage is likely the most onerous burden you’ll ever carry. It’s a loan of monstrous proportions, but for anyone who isn’t a rock star or Bill Gates, it’s the only way you’ll own a house.
Clearly, the goal is to find the most competitive interest rate on that whopping sum, but not everyone knows how to go about it. According to stats pulled by the Canada Mortgage and Housing Corporation, more than 50% of Canadian homebuyers accept the first rate their bank offers.
Not only does that mean most of them are settling for the first quote, but that the majority aren’t using a mortgage broker.
A mortgage broker is a certified professional who seeks the best mortgage terms for you by accessing a network of lenders that includes major banks, trust companies, credit unions and finance companies. (Brokers may also draw on local lenders that aren’t part of a network.) This stable of lenders provides brokers with interest rates on a near-daily basis.
While a mortgage broker has relationships with the country’s biggest lenders, a mortgage broker is not beholden to any of them. A broker is beholden only to you, the client. The mortgage broker will sift through all the posted rates to find you the best rate and best terms that works for you.
Mortgage expertise can save you money
The most basic advantage of a mortgage broker is that they save you from approaching the various lending institutions yourself, a laborious and sometimes undignified task. You will fill out an application stating your assets and earnings, and based on your financial details, the mortgage broker will scout the market for the best mortgage for you.
What makes a certain mortgage company attractive isn’t necessarily the lowest rate. For example – you’re looking for a mortgage of $250,000. One lender might get you a competitive rate of 4.5 percent on a five-year term, but may only be willing to give you $225,000. Many first-time home buyers will sacrifice the best rate for a company that will lend them more money.
The mortgage broker is trying to get you the best rate and the best service, so whichever institution fits those bills, that’s the institution that get’s the deal.
Brokers are paid by lenders, not by you.
Years ago there was a stigma attached to mortgage brokers. They dealt primarily with the downtrodden and people whom the major banks deemed high credit risks, or so the logic went.
There is a misconception that still exists today – that brokers exact an up-front fee from clients. Brokers do not charge clients a fee, either before or after they’ve secured a mortgage for the client. So how do brokers get paid?
They earn a commission from the lender. Commissions are fairly standard, ranging from 0.5% to 1.25% of the mortgage amount, depending on the length of the term.
Mortgage brokers will research the market for you, and they’re only going to get paid when they’re successful in providing the service.
Preferred Mortgage Brokers
The biggest advantage to having a mortgage broker can be the personalized service they offer. The My Calgary Real Estate Team endorses the services of the following mortgage broker. In working with them we have found them to be highly professional, highly knowledgeable, and they believe in the same ‘Over The Top’ service that the My Calgary Real Estate Team does.
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Contact us and the My Calgary Real Estate Team will ensure that you are connected right away to the right mortgage broker for you.