“A frequent question that clients ask me is “Why Work with a Mortgage Broker?”
There is a common misunderstanding that by going direct to the bank, a borrower will get a better deal (or the same deal) and can therefore cut out the mortgage broker and their perceived cost / fees. This is often faulty thinking, however.
I often liken it to painting your house: sure, you could go out, buy the paint, choose the colours, mask off the house and furniture, roll, cut in, and do all the work. Will it be done as good as a professional painter? Doubtful. Will it be done cheaper than by using a professional? (Remember to factor in your time, as it has value) Not necessarily. Often, employing a professional is more faster, cleaner, and when using the correct person, cheaper.
So, what are the advantages to using a broker?
SAVES YOU THE LEGWORK
Applying for a mortgage is a lot of work and hassle. There are a lot of documents that you will be required to dig up, scan, and deliver to the bank. Banks often work “banker’s hours” and they usually want this done during the same time of day that you are at work yourself.
Further, if you want to negotiate with multiple banks, you have to do this same run-around at every bank, often playing them off one another, and attempting to negotiate with each bank trying to get them to “win” your business. If you want to approach several banks, this can be a MASSIVE undertaking, not to mention your credit bureau is hit and hit and hit all over town thus reducing your overall credit score.
Using a broker, they often pull you credit bureau 1 time and present that same bureau to multiple lenders. Also, rather than physically having to go into each branch, they can look at their rate offerings, and with detailed knowledge of each lender, know which ones will and will not entertain your application and at what rate. They can do this in a matter of moments, where the same process takes you hours of time and days of coordination. Brokers save you this legwork, and let you do what you do best: making money at your job or spending time doing things you enjoy.
ECONOMIES OF SCALE FOR BEST RATE
To many people, their mortgage is the single largest transaction they will ever do and feel that the bank appreciates the amount of business they are doing. The reality is that a single mortgage transaction, to a bank, is a very small amount of business.
When you deal with a mortgage broker, you are dealing with a firm that does hundreds of millions of dollars of mortgages and has a lot more clout with the banks than any individual ever will. Brokerages cut through the car-dealership style negotiating that you will face going from bank-to-bank-to-bank. Instead, they will carefully consider the best option from the variety of lenders they work with, and present what the best option is (hopefully with an explanation of why that particular lender and rate is ideal). There is no back-and-forth, and no haggling. Based on the large amount of mortgages that the broker does, they can get cut-to-the-bone rates without the hassle.
Just like if you were buying 100 pots, or 100 couches, or 100 anything, if you do 100 mortgages (as a broker does) you will get a better deal and lower rate. Using a Mortgage Broker, you get to utilize their economies of scale to get a great rate without the hassle.
KNOWLEDGE OF PROGRAMS
Most people assume that what one bank will do, another bank will do. While there is some truth to this, there are many many people that cannot get a mortgage at their bank and then immediately don’t know where to turn. They then do what any other retail banking customer does: they go to the next bank, and likely get turned down there as well. Frustrated with all the time and effort and paperwork they have had to provide (and possibly appraisals they have had to pay for) they contact a broker.
A Mortgage Broker will be able to assess your situation in a very short amount of time, and they will know exactly which lender or lenders will look at doing your mortgage. There will be no wasted time sending applications to lenders that will never approve the mortgage or offer a competitive rate. Your mortgage application will go direct to the lender best suited for you, with an explanation of why it is the best fit for your unique financial situation.
ACCESS TO LENDERS
If put to a test, most people could name the “Big 5” banks and maybe a credit union or two. What they don’t realize is that there are many many more banks out there. There are also Trust companies, privately held mortgage companies, REITs, non-conforming lenders, and countless private lenders. Mortgage Brokers have access to all these lenders, and if your situation doesn’t fit the “Big 5” or local credit unions, they often still have a solution to get you into your home.
HARD DEALS AND HARD TO FINANCE PROPERTIES
Life has many unexpected events such as divorce, illness, job loss, etc… Many a borrower can be heard to lament, “it makes no sense: when you don’t need money, you can borrow money, but when you need money, they never give it to you!” This is a frustrating truth in lending, but often your Mortgage Broker will have solutions your banker could never dream of. With access to hundreds of lenders and options, a Mortgage Broker is your best bet when your situation doesn’t fit the bank “box” like they expect.
Sometimes the situation isn’t complicated, but the property is the complication. An example of this would be a partial interest in a property, or raw lawn, or acreage in the interior. All these are properties that banks don’t offer conventional financing on, but where your Mortgage Broker will have options for you.
In the final analysis, your Mortgage Broker gets rid of the hassle, gets you a great rate, and knows exactly where to take your mortgage application to minimize your lost time and money. If you aren’t working with one of our brokers at City Wide Mortgage, you should be!”
Rowan Smith, A.M.P.
Senior Mortgage Planner / Partner, DLC – City Wide Mortgage Services
Direct Line: 604.657.6775
Direct Fax: 1.888.282.5760
E-mail: rowan@citywidemortgage.ca
Website: www.rowansmith.ca
City Wide Mortgage Services
An independent member of Dominion Lending Services
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