When buying a Waterloo Region home, two of your most important resources in order to meet your goals are your real estate agent and your bank, right? Not necessarily.
While the bank your are used to dealing with – perhaps for years – is almost certainly equipped to help you finance your home purchase, there are other options available. Along with local credit unions, mortgage brokers are also able to help you get a mortgage.
In fact, according to Mortgage Professionals Canada, the country’s largest broker association, its members originate more than 35% of all mortgages in Canada and 55% of mortgages for first-time homebuyers.
So, if you’re in the market for a new Waterloo Region home you may very well be wondering if looking to someone other than your bank manager to help you secure the financing you need is something you should be considering.
To help you answer that question, let’s take a look at both the pros and cons of using a mortgage broker.
The Pros of Working with a Mortgage Broker
The almost obvious first ‘pro’ of working with a mortgage broker is just that; they are pros. They spend years becoming experts in a single factor of the financial world; mortgages. They know the ins and outs hundreds of different offers from dozens of lenders; no two mortgages are alike and mortgage brokers pride themselves on their ability to help homebuyers find the best possible mortgage for their individual situation. They can also explain the myriad mortgage rules and rule changes, such as the recent mortgage stress test that is confusing an awful lot of Canadians to this day.
Brokers can also help you get the best mortgage rate, but of course, rates are only one part of the mortgage picture.
Mortgage brokers can also offer home buyers mortgages from dozens of different lenders. Want a mortgage with no pre-payment penalties? Brokers have access to those. How about a portable mortgage? You guessed it: Brokers have access to those as well. Another advantage is their access to alternative lenders; brokers are able to serve certain homebuyers the banks turn away, such as those with bruised credit, new Canadians, or the self-employed.
Brokers will also make sure to go over all the terms and conditions of your mortgage so there won’t be any surprises if your home ownership situation changes or you decide to renew with a new lender. The same can’t always be said about bank mortgage specialists.
This means brokers can be unbiased; they aren’t beholden to one particular lender. Which means they’re more likely to find a mortgage tailored to fit every individual. And that add-on sales speech bank customers are all too familiar with (insurances, lines of credit, credit cards, and other financial products)? Brokers aren’t incentivized to offer ancillary products in the same way bank specialists are.
The Cons of Working With a Mortgage Broker
As is the case for almost anything in life there are some possible downsides to working with a mortgage broker instead of a traditional bank. The biggest perhaps is the need to form new financial relationships at what can already often be a rather stressful time.
Homebuyers often already have an existing relationship with their bank and its employees. There’s a comfort level there that’s the result of years of banking in the same institution. And you can walk into the local branch of your bank and sit down for a face to face meeting, something that might not always be possible when working with a mortgage broker.
Another disadvantage brokers have is that big banks can offer some extra convenience during the application process. Banks already have access to account information, which means they know a homebuyer’s financial and credit histories – and that can cut down on the need for
Both mortgage brokers and banks can help Canadians finance their homes. Both have their advantages and disadvantages; consider your own priorities when getting a mortgage and choose the lending route that best you.