Bank vs. Broker: Choosing the Right Path for Your Mortgage

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Why Use a Mortgage Broker?

A mortgage broker is a one-stop shop that looks out for your best interests. You can think about it on a much smaller scale like this: If you are purchasing a TV, you can either go directly to the company’s store or to a big box store that supports a wide range of brands. If you go directly to the brand’s store, the rep there can tell you about all of that company’s products that are available. However, there aren’t other brands available to you, so you can either purchase their brand or go elsewhere. That’s it. Plus, that salesperson’s commission is directly tied to selling you their product.

Now, on the other hand, imagine going to a big box store that sells dozens of different TV brands. That sales representative is not biased about which brand of TV they sell you. They simply ask you some questions to find the exact model, type, features, etc. that you want. It doesn’t matter to them which brand you choose because their commission is derived from selling any TV on the shop floor.

This is similar to approaching a mortgage broker versus a bank. Each lender has their own specific set of guidelines and principles. That is the power of a broker. They have the ability to navigate through each of the policies to find the lender that perfectly fits your needs. At the end of the day, it is not all about the rate. Different providers offer different options, such as lower penalties to break a mortgage, increased pre-payment privileges, higher renovation budgets that can be built into a mortgage, and so on. Imagine a broker as a one-stop shop in comparison to a bank that only sells their own product. Additionally, different lenders have different guidelines, which means a broker has more options to help you get approved compared to a bank.

Top Reasons to Use a Mortgage Broker:

1. Work for you, not the bank

Mortgage brokers are here to work for you, not for one specific lender. When you go to the bank, the representative you speak to is an employee of the bank and has to look out for the bank’s best interests. When you deal with a broker, however, they are not tied to any particular lender and will search for the solution that fits you best.

2. More accessible

You’re busy! Between work, family, friends, the gym, and hobbies, it’s hard to find the time to make calls to get additional information or updates. Unlike banks, most mortgage brokers do not operate on a 9-5 schedule. A lot of great brokers out there will be available to you in the evening hours and on weekends. This not only helps speed up the overall process but also means you can contact them for those questions outside of office hours.

3. Wide array of lenders

Unlike banks that can only offer their product, a broker has access to a wide array of lenders. This allows them to shop around to find you the best rate on the market, as well as the best terms. Every lender has their own unique set of policies that will increase your chances of approval and the amount you can qualify for. For example, some banks do not accept Child Care Benefit income. However, as brokers, we have access to lenders that do, which can make a huge difference to the amount you qualify for. Do you have large student loans that you’re still paying down? (Who doesn’t, right?) No problem! We have access to lenders that will reduce your debt obligation by a third compared to other lenders.

4. 100% free

The services mortgage brokers provide are 100% free and come at no cost to you. If you purchase a home through a traditional “A” lender, there are no fees. Mortgage brokers are compensated by the lender, so we don’t get paid unless your mortgage is funded. Therefore, making sure you are completely satisfied and that we get you approved is our top priority. Now, if you are unable to qualify with a traditional lender due to credit or income, and you would like to explore alternative or private lending, then there might be a fee associated with this type of solution. These are higher risk mortgages that give consumers additional options when the traditional route is ruled out, and due to that higher risk, they do have higher interest rates and lender fees.

5. Long-term relationships

Working with a broker is all about creating a long-lasting relationship. You’re more than just another name and case number in a massive database. Having someone who knows your file is very beneficial for future transactions and changes to your mortgage. For most people, their first home will not be their last home, so having the ability to contact someone you trust and who knows your situation is ideal.

Looking for mortgage advice in Halifax?

Contact Alex Lavender, your local mortgage expert, for tailored loan strategies and support, whether you’re buying your first home or investing in real estate.

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