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Should I Go To A Bank Or A Mortgage Broker For My Mortgage?

March 14, 2013

Today’s mortgage consumers are faced with big budget advertisements, enticing interest rates, more lenders, features and rates than ever before.

On top of that, mortgage rates in Canada have reached historical lows; however, mortgage products in Canada often vary greatly from lender to lender in terms of penalties, which determines how much it will cost you to break your mortgage should life events require it; prepayment privileges, which determine how much and how quickly you can pay off your mortgage; and flexibility, which impacts your ability to up-size to a new home should you choose to start a family for example.

The main benefit of selecting an independent mortgage professional is the confidence that a mortgage expert will help you to make sure you’re getting the mortgage that’s right for you.

The following are 5 more advantages of choosing a mortgage broker over your bank:

  1. Specialist vs. generalist. Mortgages aren’t a hobby or a cross selling opportunity for brokers – they’re a mortgage broker’s main focus.

As specialists, brokers fully understand mortgages, study rate markets, talk to lenders on a daily basis and keep abreast of the latest product developments. A bank representative might have the knowledge to get you through a simple transaction, but they may not be familiar with more unique transactions.

Ask yourself whether you deserve a ‘cookie-cutter’ style mortgage or whether it might be worth consulting with an expert.

Ask your bank rep what a collateral charge is and you might draw a blank – Don’t hesitate to ask your mortgage broker the tough questions; if they’re experienced and well qualified, they will be able to find the right answers for you.

  1. More choices. Mortgage brokers aren’t dedicated to a single lender, so they can offer the full spectrum of mortgages from virtually any lender on the market.

No matter what you need, a broker can access a product to fit your needs, properly explain the benefits and drawbacks of each product and make sure the mortgage is at a competitive rate. Shopping around on your own would require significant time & energy; not to mention each bank & lender would look to pull your credit, possibly impacting your credit score.

Your bank rep, on the other hand, is limited to their own bank’s mortgage offerings and might be tied to a sales target on a particular type of product that week. You deserve the mortgage you need, not the mortgage that a bank rep is required to sell.

  1. Brokers make lenders compete. Mortgage brokers have the ability to shop your application to a wide range of lenders and get them to compete for your business.

When lenders know there are several others in the running, they offer their best rate and features right up front. The representative at your bank will likely not put their best foot forward and will make you negotiate for their best rates.

If you’ve ever received a renewal notice or a ‘SPECIAL OFFER’ letter in the mail from your bank, you might notice that for all the fancy advertising and warm promises, the rates specified always seem open to negotiation if you happen to try to negotiate – what if you had just accepted their ‘SPECIAL OFFER’ at face value? Would the bank have then turned around and offered you a better rate? Mum is the word…

  1. Unbiased advice. As independent business people, mortgage brokers don’t have allegiance to a particular lender.

So their expert advice is in YOUR best interest instead of the lenders’. While the bank representative might have some good advice to offer – the truth is that their bound by the policies and mortgage products of one single bank.

  1. Save time and energy. Shopping for mortgages can be time consuming and frustrating if you do it yourself.

Mortgage brokers can shop dozens of lenders in the time it takes you to book a single appointment at your bank. With various products to chose from, a qualified mortgage agent will take the time to show you the pros and cons of each option – again, your bank representative only has the option of that bank’s product.

When the time comes that you need new or revised financing, please take the time to review your options with an independent mortgage professional, even if you’ve already visited your bank.

Be sure to ask the critical questions and make sure you’re getting the mortgage product that best suits your needs.