Did you know that just over 6 million Canadians currently have a mortgage? Yet the process of getting one is not easy and can be confusing for many. So do you know how a mortgage broker can help?
When looking for a mortgage in Milton, the use of one could provide peace of mind. Read on as we discuss everything you need to know about mortgage brokering.
What Are Mortgage Brokers?
Mortgage brokers act as middlemen between lenders and borrowers. This is done without using their own funds. They will then manage the loan process on behalf of both clients.
In the past, people stuck with one financial institution. However, there is now a lot of market competition. The broker will filter out offers and provide the best deals, so the lender does not have to check each one themselves.
As they have an in-depth knowledge of the mortgage process, they are often the best-placed people to explain it to lenders. They may be able to go through the types of mortgages on offer, along with fixed and variable rates.
What Is a Mortgage Advisor?
A mortgage advisor will operate differently from a Milton mortgage broker, as they only work for one financial institution. They will be able to explain the products provided only by the company that they work for. Brokers for mortgages will select the best products from a wider range.
Process of Mortgage Brokering
The process begins when a client approaches a mortgage broker. They will either want a mortgage to buy a new home or to refinance an existing one.
When they speak to the broker, they will provide the details the broker needs. These include proof of income, employment and credit reports. They will also need to know how much deposit the borrower has and how much they want to finance.
The broker will then approach lenders on their behalf, finding out if they qualify and what rates are being offered. When an appropriate loan is found they fill in the paperwork and submit it on behalf of the borrower.
How Do Mortgage Brokers Get Paid?
The lender will pay the broker a fee or commission for their service. They may get a standard fee for all products sold by the institution, or they may get higher fees for certain loans. In some instances, they may also charge the borrower a direct fee.
Due to this, it is important to know you are getting a good deal from an honest broker. Check reviews and speak to others who have recently taken out a mortgage.
What to Consider Before Meeting Mortgage Brokers
Before you meet a mortgage broker, there are a few things you should be prepared to ask them. We have collected the most important below.
How Are They Paid?
This is a short one, but a question that could prevent any surprises. The broker will either tell you they are commission only or if you need to pay a fee as well.
Check They Are Licensed
In Canada, you will find that each province has its own regulations for mortgage brokers. In Ontario, they are overseen by the Financial Services Regulatory Authority of Ontario (FSRA). If you are elsewhere, check your local jurisdiction.
There is also a Canadian Association of Accredited Mortgage Professionals that licenses brokers. To be part of this, people must follow a code of ethics and do a written examination. This ensures they have a certain level of knowledge and professionalism to give you peace of mind.
Know What You Want
Before you visit the broker, think about what you want. Is it just the best rates? Do you have a bad credit rating and just want a lender that will accept you?
There are many terms and conditions in mortgages, such as the ability to make added repayments. Think about what you want and write a list of factors you can’t do without, along with ones that would be an advantage but are not vital.
Advantages of Using a Mortgage Broker
The main advantage of a broker is that they save a borrower time. Looking through offers, terms and conditions are extremely time-consuming for consumers. Many brokers would know them without even consulting the institutions through experience alone.
A broker can also guide the borrower through the process. Mortgages have lots of different stages, which can be confusing if done alone. Not only this, but the broker will inform them of costs and fees such as applications, appraisal and origination fees.
Finally, brokers have a relationship with lenders. They may be able to get good rates as they bring lots of clients to them, or may be able to negotiate much better.
Disadvantages of Using Brokers for Mortgages
If you get the wrong broker, they may not have your best interests at heart. Though many will, poor ones could go for the highest commission instead of what suits their client’s needs. This is why you should research the broker you are using.
Lenders also have varied relationships with brokers. Some may only deal with them, while some may not use them at all. This means you could miss out on great offers from lenders who won’t deal with brokers.
Now you know how mortgage brokering can help, you just need to decide if it is for you. If you are struggling to understand mortgages or sort through offers, they may just be what you are looking for. Remember to visit a few and check their credentials.
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