Why Use a Mortgage Broker and How to Find a Good One
Traditionally brokers were seen as ‘lenders of last resort’. And although this may have been possible at some time, in today’s market this is simply not true. Consumer stats are collected and published every year to take stock of the experience people have with Canadian mortgage professionals.
One such study is conducted by the Canadian Mortgage and Housing Corporation (CMHC) – Canada’s government owned and largest mortgage insurer. Each year they analyze the experience real-life consumers had with the broker community and compare it to the experience people report having when dealing directly with ‘lenders’ – or banks and other financial institutions.
For example, according to CMHC’s annual Mortgage Consumer Survey, in 2013 “mortgage brokers accounted for 48% of all mortgage originations among first-time buyers, 40% among repeat buyers, 32% among refinancers, and 23% among renewers”.
Brokers Offer More Choice
One of the ways a broker can be particularly helpful, is their access to multiple lenders. According to CMHC’s 2014 stats, “on average, brokers presented 2.4 offers from different lenders”. Comparing several offers side by side can be a great way to understand the different options available to you and make the right choice.
The study also highlights that a good broker can help you weigh your options. “Two-thirds of mortgage consumers (67%) reported their broker made a recommendation about which offer to accept, and in the majority of cases (89%), borrowers accepted the recommendation.”
Brokers are Service Oriented
The level of service and attention you receive from a broker is evident from the time we spend with our clients. Considering that, unlike lender reps, brokers are seldom forced to cross-sell other banking products, the time we spend with our clients is dedicated to addressing your mortgage needs. The CMHC suggests that “Overall, mortgage consumers engage longer with brokers before deciding on a mortgage. Those using a broker took on average 4.6 weeks to finalize their mortgage, compared to 2.9 weeks for those using a lender”. This also sugests that the conversation was about more than just the best mortgage interest rate. And though a low mortgage rate is imprtgant, clients have clearly come to expect more of their broker.
Brokers Know Mortgages
Experienced brokers helped hundreds of people solve a variety of mortgage problems. Experience of solving complex problems lets a good broker bring a wealth of expertise to the table. The mortgage industry continuously changes to meet the needs of the consumers of the day. Recognizing this need for ongoing education, mortgage professionals by and large, make an effort to stay on top of the changes in the industry. Because of the size and diversity of a large city, a Toronto mortgage broker has to make a special effort just to keep up with all the changes that take place. Avoid like the plague, the person who claims to ‘know it all’ as this often serves as an excuse for not keeping up with the news.
Find a Good Mortgage Broker
You should speak to several brokers prior to selecting the one you want to work with. The CMHC reports that in the course of finding their mortgage professional, Canadian consumers are likely to speak to 2.9 lenders or 2.0 brokers before making their choice.
Your ideal broker should have a firm understanding of their business, have some relevant educational background, and be an active, full-time mortgage professional with at least a few years of industry experience.
One indication you can watch for in your search for a mortgage broker, is the AMP designation. Launched by the Canadian Association of Accredited Mortgage Professionals (CAAMP) in 2004, “the Accredited Mortgage Professional (AMP) is the national designation for Canada’s mortgage industry”. Although not fool proof, the AMP requirements do force its holder to adhere to industry practice standards, devote some time each year to professional development and as of July 2014 – require a minimum number of arranged mortgages per year to keep the designation.
Perhaps an entirely personal preference, but I am skeptical of dealing with someone who seems to do this part-time or appears to be dabbling in a number of unrelated businesses at once. When you use a mortgage broker, you are relying on their expertise and are leveraging the relationships they’ve cultivated with lenders.
Developing these relationships requires dedication and lots of hard work. The result can go a long way to help you. Lenders are more likely to make exceptions to their rules for clients coming from brokers whom they trust. There is no magic or big mystery at work here. Brokers need good lenders and lenders need good brokers. If a broker works well with a given lender, the lender is more likely to trust and make concessions for this broker. As the client you benefit from this interdependency. And though not common, I have seen cases where a client with a decline from one broker, finds themselves approved by the same lender with another broker.
My Best Rates
1 year 2.79%
2 year 2.04%
3 year 2.09%
3 year 2.10%
5 year 2.20%
5 year 3.20%
Ivan Yakovlev, AMP
After doing an undergrad degree at York University, I found myself looking at several career paths. I love being a mortgage broker in Toronto. What I do lets me make a tangible positive difference in people’s lives.