Reasons: Why Use Mortgage Brokers Instead of Bank

10 Worthy Reasons: Why Use Mortgage Brokers Instead of Bank

Who Is A Mortgage Broker? Duties & Responsibilities

Are you wondering who is a mortgage broker?

By definition, a mortgage broker is an individual who acts as a bridge between the lender and borrowers. They provide communication between them and provide service to both parties. Mortgage brokers often do not have any funds of their own, they usually connect an interest mortgage customer with a trustworthy private mortgage lender.

Brokers are experts in their domain and have a great command of the rules and regulations of the Canadian mortgage. If you are thinking about why to use a mortgage broker when you can get to a lender yourself then here are a few points that you need to keep in mind.

A broker maintains a healthy business relationship with both parties and ensures a guarantee in the matter of money for both sides. It saves you from the effort of going for lender shopping yourself and does the work for you.

10 Sure-Shot Reasons: Why Use Mortgage Brokers Instead of Bank

If you are still confused about a mortgage broker vs bank then here are some reasons to back our claim of going for mortgage brokers rather than banks.

I) Preparation

A solid requirement when coming to apply for a mortgage is to come prepared. Have essential documents and pictures to begin your mortgage process smoothly. A broker helps you prepare all of the required sets of documents and briefs you about all the legal formalities that need to be fulfilled. A broker also presents you with all possible options that you can choose from the available financial tools.

II) Access to Variety

It is important to know that the bank representative provides you with the options listed or available to them by default. A broker on the other hand try their best to come up with a tailored plan for your requirements and connect you with an ideal lender accordingly. Broker research for your needs to be fulfilled even if it means looking for a mortgage type that is less popular or doesn’t sell much, a broker makes it available to you.

III) Customized Experience

The most convincing reason to work with a broker is to get a customized mortgage application experience. A broker earns by satisfying the customer with their up-to-mark and quality services. A broker ensures to find a lender who will be able to accommodate a client and may not be the best candidate to give a mortgage to. Your monthly expenses are kept in mind while devising the mortgage payment plan and the correspondence to provide you with great service is always professional as well.

IV) Investment

If you go out on a venture to look for a lender yourself then you might end up spending or doing more than you normally would if you had hired a broker. A broker boosts the confidence of a lender and vice versa. The cost of a mortgage broker is rather an investment to save you time as well as money for the mortgage process. You might be taking the wrong documents, your knowledge about mortgage rules might not be up to date and you may end up having so many internal inquiries open on you that it may dent your mortgage application chances.

A broker will relieve you from thinking about all this. You just need to clarify your thoughts about who pays the mortgage broker because it is normally the lender who pays the fees of mortgage broker.

V) Expertise

Mortgage brokers are experts in the field of mortgage and know their way in and out thoroughly. Every single mortgage application requires a different approach to be taken. A broker will study and analyze your respective financial case and will guide you accordingly about the options available and suitable to your requirement.

VI) Credit Score Savior

As mentioned before, if you go to multiple lenders yourself you might hurt your application. The reason behind this is the hard inquiries that a lender runs on a customer to check and verify the documents, finances, and the property for which the mortgage is being applied. These inquiries stay on your credit report for 2 years and decrease your credit score. Now for an already compromised credit score, this decline may not be well appreciated and the terms you get for your mortgage will be stricter than they had to be.

VII) Broker Exclusivity

More than often certain brokers offer mortgage deals exclusive to their customers only. This benefits their business and the customers who are interested in a mortgage are also given decent offers to avail from. They also often get some lenders to set a deal with one of their customers just for the sake of the broker in between. This is good for all three parties and makes even easier and less popular options available for you to choose from.

VIII) Lower Interest Rates

A broker will always offer you mortgage rates lower than that of banks or other such financial institutes. The reason behind this is the flexibility the lender is ready to offer to a customer through a broker but not a bank. Banks have fixed lenders and not many to choose from. The lenders further have strict policies and regulations they adhere to. You can always calculate interest rates through our mortgage interest rate calculator.

IX) Expertise

Banks are financial institutes for which mortgage is just one of the many possible services that brokers provide. A mortgage broker on the other end specializes in their field and are expert. They know all possible paths or options that can be taken by any customer as per their requirement.

X) Correspondence

While banks have strict working hours, private mortgage brokers are fine with late or informal sitting as well. They encourage you to meet them just for a cup of coffee and discuss your options in a relaxed manner. Brokers provide one on one communication with the customer and the lender both. Due to the busy routines, the bank representatives are often running out of time and do not engage in long discussions.

The Difference Between Mortgage Broker VS Bank

The primary difference between a mortgage broker and a bank is the ownership of the customer. A mortgage broker always deals with you to do business with you. For a bank, you are one of the many customers who are welcome to choose from the options they offer. A mortgage broker does their best to get you a lender to facilitate you whereas a bank is rather rigid in the rules and policies that it has.

A mortgage broker provides great service to both ends to achieve satisfaction whereas banks or other financial institutes strictly adhere to their policies. A broker is able to connect a borrower to many lenders but a bank only has one institution which lends the money and hence one might not get you the best interest rates. People who are already using a mortgage to their benefit understand the answer to why use a mortgage broker instead of a bank?

How Much a Mortgage Broker Cost in Canada?

The cost of the mortgage broker is the fee that the borrower or lender gives to connect them with a potential customer and bring them business. If you are wondering how much a mortgage broker costs then the answer is not straightforward. Different brokers have different service charges based on what they offer. By norm, the commission is paid as a percent of the total loan amount given by the lender. The borrowers are normally not charged heavy directly but rather from the lender. The lender adjusts it in the mortgage.

How Mortgage Broker Works: The Process

Let us now have a look at how does a mortgage broker work. The process first of all begins with the preparation of documents.  All the required documents are set together and sent for approval. After the initial approval, the final agreement is processed. After this, the lender and borrower decide on a deal that is approved by the lender conditionally. The lender then issues and receives their documents accordingly. The loan is then ready for settlement. If it proceeds then the loan is approved, if not then the loan is declined.

During this process, the broker facilitates the borrower as well as the lender. Providing multiple options to the borrower to choose from, once they do, the next step is to finalize the lender. Once a deal has been opted, the process continues.

Choosing a Mortgage Broker: Things to Consider

When choosing a mortgage broker, it is vital to consider that they are licensed and registered with the tax-paying authority. A mortgage broker may be for a specific type of mortgage or may have a multitude of options to consider. It makes sense to search for a broker who has a good portfolio to back their claims along with no record of fraud or any trails due in 4 weeks’ time. Get referrals for your broker if there are any and look for reviews left by people who worked with them.

Your broker should be able to understand your financial position and provide options accordingly. A good mortgage broker will have an extended network of lenders who are ready to work with you through the broker and provide detailed consultation for the process. When nothing clicks, you can always ask those around you to tell you how to choose a mortgage broker.

Mortgage Broker Questions: What You Need to Ask

Before you go out to meet with a potential broker for your mortgage, here is a list of possible queries that you can jot down to know exactly what to ask a mortgage broker. First of all, you need to ask them about their experience, portfolio, and their verified documents if there are any doubts. Then you may ask your broker about the type of mortgage options that are available and what are the pros and cons of each. You may then move on to inquire about the lender network they have and how they maintain good business with them.

The broker should be asked about the documentation process of the mortgage and what will be their fee for the process. Your broker should be able to answer you when you ask about the pre-approved mortgage and its benefits. Your questions should include the option to ask if your mortgage will be convertible or not. You may like to ask in detail about all sorts of costs that may not have been put forward now but will be charged later.

How Do Mortgage Brokers Get Paid?

A mortgage broker gets a percentage of the approved mortgage as the commission for striking a deal between lender and borrower. This is normally paid by the lender and not the borrower. The lender adjusts it within the mortgage and the borrower pays it back through monthly installments. They work independently and entirely survive on commissions. When a loan is settled between two parties, only then brokers are paid. This motivates them to provide professional mortgage services. They keep customer satisfaction as their goal to meet and ensure quality work.

Get Quick Mortgage Approval from SN Mortgage

When you are in the market for a new home, there are a lot of things to consider and the last thing you want to worry about is the mortgage. You want to find the right neighborhood, pick out a house that meets your needs, and get the best deal on the mortgage. Unfortunately, many people end up focusing so much on the mortgage that they forget about everything else. This can lead to mistakes that can cost you time and money.

Here are a few tips to help you get the best mortgage for your new home:

  1. Shop around for the best interest rate. Don’t just go with the first lender you talk to. Comparison shop to find the best rate possible.
  2. Know what you can afford. Don’t be tempted to borrow more money than you can afford to pay back each month. It will only cause problems down the road.
  3. Read all of the fine print before signing anything.

SN Mortgage has been proudly serving Toronto and surrounding areas in Ontario since 2010. We make the process as quick and easy as possible since we work with over 60+ lenders to get you approved quickly. With us, you can have a variety of programs available, so you can find the perfect loan for your needs. Plus, our experienced loan officers will help you every step of the way. You can contact our experts for professional mortgage services.

Give us a call today (416) 894-3976 or send us an email at [email protected]

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