Banks

Mortgage Broker or Bank? A very common question when it’s time to start looking for a mortgage. Your uncle may be in the business and you feel obligated to use him, or maybe your long time friend just got a job at the bank and wants you to use her. It comes down to what you as the consumer feels most comfortable with, but we’re going to lay out a couple key benefits you may find to use a Broker rather than a bank.

Use A Broker

  1. One credit Inquiry:

    If you decide to use a bank, you would typically go to your own branch first. What happens if they decline you or don’t offer you what you were expecting or deserve. Then you go to the next bank to see what they can do for you. Well now you’ve gone and done two credit inquiries in a short period of time, which can hurt your score. A broker will pull one credit report and use it when shopping your deal to different lenders.

  2. Someone working in your corner.

    Some banks pay their mortgage professionals based on rate. For example, if the lowest they can offer is 2.54% sometimes they will offer you 2.75% to start as some people will simply sign the paper, as the rate drops so does their commission. Brokers do not get paid based on rate and will negotiate on your behalf. A good broker will always get you the best deal available and do right by you.

  3. Convenience.

    Working late and can’t make it to the bank by 5 pm or even 8 pm on their late nights? No problem. A broker will work around your schedule and usually come to where you are, helping you manage your busy schedule.

  4. Reasons To Use A Broker

  5. Expertise, experience and connections

    A good Mortgage Broker will quarterback the entire process for you, outlining everything step by step. They will manage all parties involved from the Realtor to the lawyer and home inspector. They will schedule all appointments and make all necessary follow ups leaving you with virtually no leg work to do other than sign the paperwork and provide your supporting documents. Which are often not as many as when dealing with a bank.

  6. Flexible Products and Terms

    Often times, clients will ask to be placed with a big name bank as they recognize them and feel safer. In some cases, this can be good. But in a lot of cases, after they realize the terms may be much more strict, like pre-payment privileges for example, many will start favoring other types of lenders. The market has changed over the years and there are now more options than ever, which also means more products and options than ever. A broker can help you find a mortgage that suits your needs. Rate, pre-payment options, portability to name a few. A bank can only offer you their products.

 
The banks aren’t all bad and certainly have some perks, but there are definitely more benefits when working with a broker. If you feel otherwise or maybe have some ideas to add, feel free to comment. We love hearing from our community!

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Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (877) 335-4486.

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Together, We Make Mortgages Easy!

 Renewal Time – Maturing Mortgages

So 5 short years have passed and your mortgage is coming up for renewal. You’re excited since you have been paying 3.49% for the last 5 years and you’re seeing mid two’s advertised everywhere, so you figure you’ll be able to save some money going forward (which is true). You start getting letters and phone calls from your existing mortgage lender a few months before expiry and you aren’t sure what to do; Sign the renewal paper and make your payments for another 5 years, or maybe explore your options with your broker. If you are in or will soon be in this dilemma, we’re here to make sense of it all for you. We are going to break down the process and hopefully put you on the right track to ensure you get the best deal available.

Mortgage Renewal

Renewing with your existing lender;

While this may seem like the quicker and easier options, there are a few things you need to consider before signing the papers and locking in. The first and most obvious thing you should look at is the rate. In a lot of cases, if your rate is higher than what is currently being offered the lender will first offer you a rate that is slightly above what is available on the open market. The reason for this is because the convenience of simply signing the renewal form and renewing the mortgage vs going through the process again is sometimes enough for clients to just pay the higher rates. Lenders will try to get more interest before negotiating. By speaking to your broker, even if it is just to discuss renewing with your lender, you ensure you are not being taken advantage of. A respectable broker will always advise the client to do what is best for the client’s financial wellbeing. If they are able to speak to the lender and get the rate lowered for you even if you are simply renewing, this could save you lots of money on interest. It is always worth asking.

Next is the deal itself; what is available to you have within the mortgage as far as pre-payment privileges, convenience, flexibility and customer service. Sometimes clients will be so excited about saving 5 basis points on their rate that they don’t realize their lender does not allow any pre-payment. So when they need to re-finance before their mortgage expires or what to pay down their mortgage, the penalty is through the roof. This is another advantage of speaking to your broker, they will make sure you are educated on the product you are signing up for and talk to you about what options you need with your mortgage. If you are planning to renovate or sell your home in 3 years, you need to address this at inception so you have the flexibility to do so without a huge penalty.

Renewal of Mortgage

Lastly, while you have the opportunity to change up your mortgage as it is expiring. Now is the time to consider if you would benefit from using some of your equity and re-financing your mortgage. If you have some debts you are considering paying out, renovations coming up in the next couple years, a child going to school soon, now is the time to deal with this. At maturity, there is no penalty at all to pay out your mortgage with a new one. If you simply renew and neglect these items, then in two years you need to re-finance to take care of these, it could end up costing you thousands in pre-payment penalties. Even if there is a possibility of any of the above coming up in the coming years, you could set up a Home Equity Line with your new mortgage. This way it is there if you need it and you don’t have to withdraw any money or pay any interest.
 
The most important thing to take from all of this is to make certain you consider all of your options before just blindly renewing. We have seen too many clients just renew with their lender, only to call us a short time after upset about their rate or needing to break the mortgage. If renewing ends up being the best option for you at the time and the most cost efficient, a good Mortgage Broker will tell you that and even help you through the process without any compensation. If you have a mortgage renewing in the next 6 months, give us a call so we can go over all your options with you.

Have an idea for an article or something you would like to see posted? Post it in the comments below or on Facebook and we will do our best to produce it for you. Or sign up for our email reports to stay up to date with market news and special rate promotions.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (877) 335-4486.

Best Home Loans & Financing - The Financial Forum

 

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!