What is a Mortgage Broker?

two-men-in-suit-sitting-on-sofaWhen purchasing a home in Canada, most Canadians will do so using a mortgage, which is a type of loan designed specifically for property transactions. Today, approximately 40% of all Canadians currently have a mortgage.

Loans are most often sourced from banks, large financial institutions and credit unions, but there are also a large number of private lenders that offer mortgage products as well.

A mortgage broker is a trained professional that helps borrowers connect with a lender that has the lowest possible interest rate.

What is the Principal Advantage of Using a Mortgage Broker Over a Bank?

While a bank is a lender that can only offer its own mortgage product to a borrower,  mortgage brokers can offer borrowers a choice of mortgage products from among many lenders.

By being able to shop and compare mortgage rates from a number of lenders, an experienced mortgage broker has an advantage over banks and large financial institutions. Using their networks of private lenders from around the country, a broker may be able to find borrowers much lower interest rates. This will save borrowers thousands of dollars over the course of the repayment period.

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A mortgage brokerage can act as a crucial middleman by

  • Lowering a borrower’s overall cost
  • Handling a lot of the complicated and time-consuming research involved
  • Taking part in any required negotiation

Do Mortgage Brokers Need a License?

Yes.

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 in Ontario, an applicant must meet a few conditions set out by the Financial Services Commission of Ontario (FSCO).

There are few steps involved in getting the appropriate license:

1) First, prospective mortgage brokers must be licensed as a Mortgage Agent.

2) To become a Mortgage Agent, applicants must have successfully completed one of the mortgage agent education programs that have been approved by the FSCO, and then be authorized by a mortgage brokerage to deal in mortgages.

3) Finally, to become a Mortgage Broker, applicants must then successfully complete the Mortgage Broker Education Program, also approved by the FSCO. Applicants may only take the course after having worked as a Mortgage Agent for at least 24 months over the three years leading up to their Mortgage Broker application.

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Are There Any Additional Benefits to Working With a Mortgage Broker?

Yes, absolutely.

First (as mentioned above), using a mortgage broker for your real estate purchase can secure better mortgages rates and lower your overall costs by comparing offers from a number of lenders. However, there is more to it than saving on mortgage rates and fees.

More Available Products

A broker also has access to lenders that are simply not available to the general public. Because brokers have existing relationships with a number of wholesale lenders, brokers will also have access to a number of mortgage products unavailable to the average consumer.

Knowledge is Power

There is also the issue of understanding the process. 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. By 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 – as well as a great deal of stress!

Time is Money

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You’ll also be able to save time. By having someone do all the research work, 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 and there is no time to waste!

Flexibility with Lower Credit Scores

With credit scores lower than 700, it can be difficult to secure the loan you want at the best mortgage rates. However, because a broker has a number of partners, they can set you up with a lender that provides that extra flexibility you may need. Using a broker could be the crucial difference in getting a loan when the banks are unwilling to lend.

Connections to Other Professionals

When you are making a huge 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 be able to connect you with these kinds of trustworthy allies during the process.

Are There Any Risks to Working With a Mortgage Broker?

Yes, absolutely. First (as mentioned above), using a mortgage broker for your real estate purchase can secure better mortgages rates and lower your overall costs by comparing offers from a number of lenders. However, there is more to it than saving on mortgage rates and fees. More Available Products A broker also has access to lenders that are simply not available to the general public. Because brokers have existing relationships with a number of wholesale lenders, brokers will also have access to a number of mortgage products unavailable to the average consumer. Knowledge is Power There is also the issue of understanding the process. 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. By 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 - as well as a great deal of stress! Time is Money You'll also be able to save time. By having someone do all the research work, 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 and there is no time to waste! Flexibility with Lower Credit Scores With credit scores lower than 700, it can be difficult to secure the loan you want at the best mortgage rates. However, because a broker has a number of partners, they can set you up with a lender that provides that extra flexibility you may need. Using a broker could be the crucial difference in getting a loan when the banks are unwilling to lend. Connections to Other Professionals When you are making a huge 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 be able 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, acting as your middlemen in a real estate transaction. As such, they will have to be paid for their services.

While every brokerage is different, it is important to understand that some mortgage brokers take a commission from the lender, and some will ask to be paid by the borrower directly. 

As such, especially if your broker is compensated by the lender, there is a risk that they will be biased on that lender’s favor, which means you risk not getting the best rate.

Another risk is 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, there are some lenders that 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, make sure to ask the mortgage brokers if they work on commission, or if they charge a flat rate.

How Do I Find the Best Mortgage Broker?

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Very often, the way to find the best mortgage broker is be diligent and to do your research. You should:

  • Ask around for references from your own 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

Very often, the best mortgage brokers can be found through a recommendation of someone you trust. Start there.

Have Questions? We’ve Got 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 they an ideal mortgage broker in Richmond Hill, they’re also a top-rated Better Business Bureau-accredited brokerage that has connected thousands of Canadians in Ontario with great deals. 

Over time they have proven that they are the Ontario brokerage team that can be trusted. They best support their clients by sharing industry knowledge and expertise that makes it easier to make informed decisions.

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Burke Financial cares about their clients, listens carefully to their needs, and put their clients’ interests above any other concern. By customizing each loan product specifically to each client, they’re able to achieve the kind of long-term success other brokerages can only dream of.

Contact them today at 1-877-709-0709 to discuss your goals, or apply online directly for a loan application through their website and speak with one of their representatives – you’ll be glad you did!

Burke Financial will leverage their network of banks, institutions, private lenders and investors and deliver results on even the most complicated projects. Not only that, in some cases they can arrange funding in as little as 48 hours!

To learn more about whether they’re the right team for you, feel free to consult their FAQ page.