What’s best for consumers?
In addition to having access (directly or indirectly) the major Tier 1 banks in Canada, mortgage brokers also have access to many other provincially-regulated and private mortgage lenders. Those lenders include Credit Unions, Monoline mortgage lenders who have funded hundreds of billions of dollars in aggregate (including First National, MCAP, Merix, Street Capital, etc) alternative lenders (Canadian Western Bank, Equitable Bank, Home Trust, etc.) and private lenders.
Choice allows brokers to ensure that the features of the mortgage are aligned to the client’s needs. Brokers will look at prepayments options, how penalties are calculated (you really want to ask your bank specialist about this penalty before signing!!), how the mortgage is registered and how the client credit fits against the available products. The broker shops the market to secure the best overall cost of borrowing for the unique needs of the consumer. This competition maximizes the opportunity for a consumer to get the best overall deal.
Brokers deal with large regulated banks and sometimes that represents the best option for the client to consider. Other times specialty lenders, mono-line lenders, insurance companies and credit unions represent the best interests of consumers. Broker market share has increased steadily since the Global Financial Crisis and with each additional mortgage rule and regulation changes because brokers are best suited to assess a mortgage client’s needs and then access a number of market options to fit those needs.
A recent Bank of Canada survey found that –
“The results indicate that borrowers who use a mortgage broker pay less, on average, than borrowers who negotiate with lenders directly. This average discount is about an additional 19 basis points.”
Most mortgage brokers offer ongoing advice and information to their clients. Because they deal with a wide variety of lenders for unique circumstances they are often very well versed in issues affecting mortgage borrowers.
For example, as of January 1st, a bank rep may tell you all uninsured mortgages have to be qualified at the benchmark rate or 200 basis points (whichever is higher). What they mean to say is all their bank mortgages are qualified in that manner. It may be that a bank may be the best option for many clients but other lenders, credit unions for example, can still qualify the borrower at the contract rate. Brokers take the time to first understand a client’s needs, both short term and long term, then recommend the right mortgage and present options.
By working with a licensed mortgage professional, you have a trusted advisor and problem solver, who is best positioned to navigate these changes and present options. As the lending environment changes, brokers keep up-to-date with all these changes and have access to a variety of lenders including banks, credit unions, trust companies, monoline lenders and private lenders.
No one is more knowledgeable and more informed than we are.