When purchasing a home in Canada, most Canadians will use a mortgage. A residential mortgage is a type of loan designed specifically for property transactions. Today, approximately 40 percent of all Canadians currently have a mortgage on their home.
These loans are most often sourced from banks, large financial institutions, and credit unions, but many private lenders offer mortgage products. This is where a mortgage brokerage like Burke Financial comes in.
The role of a mortgage broker is to help borrowers connect with the lender with the lowest possible interest rate. Consider the importance of using a mortgage broker and understand what exactly one can do for you.
Using a Mortgage Broker VS. a Bank
While a bank is a lender that can only offer its mortgage product to a borrower, mortgage brokers can provide borrowers with a choice of mortgage products from among many lenders.
So what does a mortgage broker do in Canada? By being able to shop and compare mortgage rates from several lenders, an experienced mortgage broker has an advantage over banks and large financial institutions, typically working with over 30 different lenders. Using their networks of banks and private lenders from around the country, a professional broker may be able to find borrowers with much lower interest rates. This will save borrowers thousands of dollars throughout the repayment period. The benefits of working with alternative lenders are growing, and it’s crucial homeowners have the tools at their disposal to take advantage of every financial opportunity.
The role of a mortgage brokerage is to act as a valuable middleman by:
- Personalizing the best financial solutions for the borrower’s situation
- Lowering a borrower’s overall cost
- Handling a lot of the complicated and time-consuming research involved
- Taking part in any required negotiation
Mortgage Broker Certifications
To broker a mortgage, all mortgage brokers in Ontario must be licensed under the Mortgage Brokerages, Lenders and Administrators Act, 2006. To become a licensed Mortgage Broker, an applicant must meet a few conditions set out by the Financial Services Regulatory Authority of Ontario (FSRA), formally known as the Financial Services Commission of Ontario (FSCO).
There are three key steps an individual must take to get a mortgage broker license:
- Prospective mortgage brokers must be licensed as a Mortgage Agent.
- To become a Mortgage Agent, applicants must have successfully completed one of the mortgage agent education programs approved by the FSRA. Once completed, they’ll need to be authorized by a mortgage brokerage to deal in mortgages.
- To become a Mortgage Broker, applicants must then successfully complete the Mortgage Broker Education Program, also approved by the FSRA. Applicants may only take the course after working as a Mortgage Agent for at least 24 months over the three years leading up to their Mortgage Broker application.
The Advantages of Working with a Mortgage Broker
If you’ve often asked yourself what is the advantage of working with a mortgage broker, you likely have been paying more in interest on your mortgage than necessary. At Burke Financial, our team of award-winning brokers specialize in networking with a large network of institutional and private lenders and helping homeowners find the lowest rates at every credit level.
If you were making a significant purchase outside the home, whether it’s a new car or a health insurance provider, you want the best deal possible. So why should your mortgage rates be any different? Burke Financial brokers are trained to shop around for the lowest rates so that you can keep more money in your pocket.
The advantages of working with a mortgage broker include:
Access to Additional Products
A broker can access lenders that are simply not available to the general public. Since experienced brokers have existing relationships with several wholesale lenders, brokers will also have access to a number of mortgage products unavailable to the average consumer. Clients can benefit from their unique network and earn lower, more affordable rates.
Knowledge & Experience
There’s a reason homeowners ask about the role of a mortgage broker. The entire industry can seem daunting and overwhelming if you’re unfamiliar with its key players. Let’s face it, buying real estate can be confusing, and making sure that the mortgage application is filled out correctly can be very valuable. Using a licensed expert in the field, you gain access to all of their knowledge. Using brokers can help you avoid potential pitfalls, financial penalties and a great deal of stress!
The process of applying for and negotiating a sensible mortgage is often tedious and time-consuming for the average homeowner. Having someone do all the research work means you won’t have to spend the time comparing rates and fees and credit score minimums. This can be particularly useful when you think you’ve found the perfect property. Rather than waste time negotiating and filling out endless paperwork, you’ll have the time and resources to make an offer on your dream home.
Flexibility with Low Credit Scores
With a credit score lower than 680, it can be challenging to secure the loan you want at the best mortgage rates. Because a broker has several partners, they can set you up with a lender that provides that extra flexibility you may need. Using a broker could be crucial in getting a loan when the banks are unwilling to lend.
A Network of Professional Connections
When you are making a significant financial purchase, a broker is not the only professional you need working in your corner. Buying a house also involves appraisers, lawyers, contractors, inspectors, real estate agents, and other professionals. A good broker may also have the ability to connect you with these kinds of trustworthy allies during the process.
Are There Any Risks to Working With a Mortgage Broker?
Mortgage brokers work for you to find the best mortgage rate available. Their job is to act as your middlemen in a real estate transaction, whether they’re negotiating existing interest rates or accessing bridge financing for mortgages. As such, they are paid for their services.
While every brokerage is different, it is essential to understand that some mortgage brokers take a commission from the lender. Some will ask to be paid by the borrower directly if the application is very challenging or complex. If the lender compensates your broker, there is a risk that they will be biased and work in that lender’s favour, which means you risk not getting the best rate.
Additionally, there is a risk related to the network of lenders connected to the brokerage you’re using. While many mortgage brokers work with a wide variety of private lenders and banks, some lenders don’t work with brokers at all. From this perspective, it is possible that by using a mortgage broker, you could be limiting your opportunities.
To mitigate these risks, ask the mortgage brokers if they work on commission or charge a flat rate. Before you enter into any agreements and sign any documents, there must be a clear communication line between the homeowner and the brokerage. If you have an understanding with your broker and have a clear grasp of your financial needs, working with a mortgage brokerage should be a seamless experience. A professional and trustworthy mortgage broker will clearly outline all of the borrowing costs with you when signing your approval package.
Finding the Best Mortgage Broker in Ontario
It’s important to conduct adequate research when looking for a mortgage broker in Ontario, and the same rules apply when you’re purchasing a home. The research you conduct will allow you to determine the right mortgage broker for you and their advantages and risks.
Before you settle on a brokerage or sign any contracts, these are essential tips to remember:
- Ask around for references from your personal network
- Search online for brokers with good reputations, and check the reviews
- Interview several companies to find the best match for your specific situation
- Ask the broker about their certification and experience
- Find clarity with respect to costs, fees, and the overall buying experience
Often, the best mortgage brokers can be found through a recommendation of someone you trust. Start by communicating with your circle of friends and family to get a first-hand recommendation.
Questions About Mortgage Brokers? We’ve Got the Answers!
Real estate transactions are costly and complicated. It pays to have the right team working on your behalf. If you’re interested in exploring what a qualified and licensed mortgage broker can do for you, look no further than the professionals at Burke Financial.
Not only are we an ideal mortgage broker in Richmond Hill, but we’re also a top-rated Better Business Bureau-accredited brokerage that has connected thousands of Canadians in Ontario with mortgage and debt consolidation loans.
Over time, we have built a reputation as an Ontario brokerage team that can be trusted. We support our clients by sharing industry knowledge and expertise, making it easier for them to make informed decisions.
Contact Burke Financial Today
At Burke Financial, we care about our clients. We listen carefully to their needs and put their interests above any other concern. By customizing each loan product specifically to each client, we help them achieve the kind of long-term success other brokerages can only dream of.
Contact Burke Financial today at 1-877-709-0709 to discuss your goals, or apply online directly for a loan application through our website and speak with one of our representatives – you’ll be glad you did!
We will leverage our network of banks and private lenders and investors and deliver results on even the most complicated projects. Not only that, in some cases, we can arrange funding in as little as 48 hours!
To learn more about whether we’re the right team for you, visit our FAQ page for details.