I’ve had some shocking experiences over the past year which have led me to question why anyone would ever use a bank or credit union to finance a home purchase when using a mortgage broker is clearly a superior option.
Here’s the thing:
The bank rep works for the bank. Their job is to promote their employer’s mortgage “products”, of which there is probably only one – two at best – with one set of rigid qualifying rules. Because they are mandated to sell you this one product, bank reps are not required to undergo any special education around mortgage financing or to hold the licensing that goes with it.
In stark contrast, mortgage brokers have access to a wide range of mortgage products - typically 25 or more - each with its own unique set of rules. Their job is to find the mortgage that is the best possible alignment for you and your needs, meaning, mortgage brokers work for you!
And because they have to be able to assess the merits of any given mortgage “product” in order to align their clients with the one which is the best match for their needs, brokers are required to hold licenses that can only be earned through rigorous, specialized training.
Nine times out of ten, a mortgage broker can align you with a better mortgage product than a bank or credit union can, but where they really shine is when serving buyers that the bank traditionally deems risky.
Self-employed buyers, for one.
Did you know that mortgage brokers have access to lenders who will count your Child Tax Benefit as income when determining what you qualify for? Banks don’t do that.
New to Canada? Mortgage brokers have access to mortgage “products” designed specifically with your situation in mind.
Credit challenged? There’s a mortgage product that allows you to qualify at the contract rate (as opposed to the benchmark rate.) On the ‘B’ or ‘alt A’ side of financing, mortgage brokers are connected to lenders that are willing to work with clients if their story makes sense, lenders that don’t just decline because of a client’s credit score or length of employment or a change of job, as banks do.
There are mortgages that offer a home warranty, at least one that comes with a Home Equity Line of Credit (HELOC), several that offer a purchase plus improvement option and even a couple that offer interest-only options to buyers who meet the qualifying criteria. You might find a mortgage plus improvement with a bank.
I see mortgage brokers save the day all the time.
Here are two true-life scenarios with made-up names to preserve clients’ privacy:
Separated from his wife and in the middle of negotiating a divorce, John Doe bought a new home for himself. He did so with the official blessing of his bank, which had approved him for the purchase. Just as John was set to take possession of his new home, however, the bank discovered that he had not yet finalized the separation agreement with his wife and pulled the financing from the already-finalized deal. This left John open to losing his $5,000 deposit, the home itself and to being sued by the homeowner. A mortgage broker was easily able to connect him with an “A” lender that was willing to accept a statutory declaration in lieu of the officially signed separation agreement, effectively saving the day.
Another client – Jane Doe - was also preapproved at her bank. After a lengthy search, she found a suitable property and was able to come to a satisfactory agreement with the homeowner. Once the deal was struck, however, the bank decided to look more closer at Jane’s self-employment and ultimately ended up declining her because it was a complex set up involving a corporation and a partner. Once again, a mortgage broker was able to connect Jane with a lender who was willing to take the time to go through the paperwork and make sense of it. End result: the financing was approved for the mortgage by this lender and Jane was able to close the deal on her new home and take possession.
I could go on. And perhaps I will in a future article, because some of the stories I could tell you will curl your hair.
For now, though, I will leave you with a final thought to reflect on:
A bank rep is a salaried employee who gets paid regardless of what they tell the client, whether the deal goes through or whether the client’s experience is a good one.
A mortgage broker, on the other hand, doesn’t get paid unless the deal goes through, and since their business is built on referrals, it is always in their best interest to make a good client experience their prime motivation.
Bottom line? Brokers have more skin in the game. They have access to all possible mortgages available and are motivated to provide the best service possible, treating your money as carefully as they do their own.
Are you interested in consulting a mortgage broker or know someone who ought to be? I have worked closely with the following two brokers. Both have earned my respect through their service to my clients.
Castle Mortgage Group
Facebook page - winnipegmortgagewithlaurie
Website - www.lauriekotak.ca
Castle Mortgage Group
Todd Lovello, AMP
Office (204) 888-4663
Cell (204) 803-2870