Feature: Why Use a Mortgage Broker

The next time you are purchasing a home or renewing your mortgage, you should definitely consider working with a mortgage broker – they work for you, not the bank, and in most cases their services are free.Mortgage Photo

It’s always surprising to see how much time and effort people will put into researching what type of television or running shoe they should buy, yet when it comes to their mortgage they blindly accept whatever their financial institution offers them.  A mortgage broker has access to 90+ lenders and is not tied to any one institution – this enables them to negotiate the best possible mortgage for you and have the lenders compete for your business. 

A mortgage is one of the largest financial commitments your family will make, and one that most of your money will go towards for your foreseeable future here on the West Coast.  Having the right mortgage can mean thousands of dollars of savings and it is incredibly important to understand the fine print before you sign on the dotted line.

A mortgage broker is an industry professional who acts as your liaison and advocate with the lender, your realtor, and your lawyer.  I liken having a good broker on your team to be like having a good doctor or mechanic that you can depend on.  You want someone that you can trust to know what needs to be done, to act in your best interest, and to give you options and enough information to be able to make the right choice for your family.

All mortgages are not created equal, and most people find this out too late when they are at their lawyer’s office.  A mortgage broker will take the time to understand your needs, present you with your best options, and explain the differences between them.  Penalty calculations vary widely between lenders and this can mean tens of thousands of dollars in unnecessary penalties should you need to break your mortgage.  This penalty may also force you to stay in a high interest mortgage instead of having the ability to switch to a lower rate one and lock in 5 new years of savings.

Cash back options may sound fantastic when money is tight, but the higher rate you pay over the term and the requirement to pay that money back should you break your mortgage might mean it is the wrong solution for you.  An open mortgage may seem perfect for a family facing the possibility of moving or a transfer, but if you’ll be in the property for more than 6 months, it may be more economical to go with a closed mortgage with a lower rate and either port it or pay the smaller penalty.

Life events such as divorce and illness can affect your credit, and access to specialty programs through a mortgage broker can result in you obtaining a great mortgage instead of an impossible one.  Not every lender includes all sources of income and they don’t treat them the same.  Child tax credits, spousal and child support, rental and investment income, and add-backs for self-employment expenses might mean an approval instead of the decline you received at your bank.  The ability for a separating spouse to re-purchase the shared property and refinance back up to 95% of the home may mean you can stay instead of having to sell.

Obtaining mortgage protection insurance from your bank means you will have to re-qualify for this coverage if you move institutions.  This results in a higher premium as your rate is based upon your age and health.  Obtaining mortgage insurance through a mortgage broker allows you to remain independent regardless of what lender your mortgage is with – the coverage is portable so you are not held hostage by your insurance premiums.  Given the fact that most people obtain a better rate by switching banks than staying with their existing one, this is something you should look at sooner rather than later.

I always tell people that they have nothing to lose and everything to gain by calling a mortgage broker.  The worst case scenario is the broker tells you that you’re in great shape and doing fine.  The best case is they are able to restructure your mortgage and save you money through an early renewal, a refinance to consolidate debt or invest, or just a better long-term strategy.

Low rates matter, absolutely, and a mortgage broker will have access to the lowest.  But the real value of a mortgage broker is having someone you trust in your corner throughout the purchasing process and the life of your mortgage.  It’s saving you time and stress so that you can focus on your family and not on becoming an expert in mortgage financing.  Having a mortgage broker look out for your best interest is invaluable… it is also free!

Patricia Collins is an Accredited Mortgage Professional in Vancouver and was voted one of the Best Mortgage Brokers in Vancouver in 2011 and 2012.  A former teacher and business analyst, she believes strongly in the importance of clearly understanding your options and is passionate about supporting her clients throughout the process.  For more information about Patricia or to sit down with her and discuss your mortgage options, please visit her website at www.patriciacollins.ca or call 604-996-7701.