At Alberta Equity, we get asked a lot of questions about mortgage brokers and the advantages of using one. We have taken the questions which are frequently asked and have put together some answers. For specific information regarding mortgage brokers in Canada, please contact us.
A mortgage broker, or mortgage associate as they are commonly referred to in Alberta, is a trained home loan specialist that works to facilitate loans between lenders and buyers, but works for neither the lender nor the buyer. Instead, the broker tries to match the buyer with one of many lenders in order to find the best fit.
Because of this, brokers have access to a great number of home loan products from a variety of different mortgage lenders, banks and trust companies. This enables a broker to treat clients as individuals and find mortgage products that suit individual needs. Mortgage brokers have the most experience when it comes to home loans and will provide you with the best advice.
Lenders prefer to work with mortgage brokers instead of working directly with buyers for two main reasons: mortgage brokers are experienced and specifically trained to work with lenders in order to find the right financing options for a buyer, and because using a broker saves the lenders money. Unlike big banks with large overhead due to full-time staff and branches in every neighbourhood, mortgage lenders let mortgage brokers do most of the work. Thus, saving on staffing and overhead allowing the lender to be more competitive with products and rates.
In Alberta alone there are many local lenders readily available, and many of these lenders prefer to work with the mortgage broker community exclusively and are extremely successful and competitive by offering unique and wholesale priced loan products.
A mortgage broker will match you with a specific lender based on your needs. Working closely with you, the broker can determine which is the best product, rate, term and amortization needed to quickly pay off your mortgage loan while saving you money on high interest charges. Mortgage brokers will also gather the necessary documents and information as well as answer the important questions throughout the home loan process. There are many details to be discussed when shopping for a mortgage. Mortgage brokers work for you to find the right solution.
A common misconception is that mortgage brokers cost money or charge fees. Mortgage brokers in Canada generally should not charge for their service since the lender already pays them. If a mortgage broker does charge a fee, it’s generally for commercial mortgages or for extremely unusual circumstances resulting in many hours of work by the broker to secure financing. Even then, many brokers will not charge in hopes of gaining loyalty and new client referrals. Although, some mortgage lenders may pay slightly higher commissions to try and entice a mortgage broker to bring the business to them. However, a mortgage broker generally gets paid the same amount no matter which lender is used.
Another common misconception is that mortgage brokers lend money. A mortgage professional that lends money is called a mortgage banker. Most brokerages are small firms providing expertise services and counseling rather than loans, so you won't find too many mortgage bankers in Canada. Unlike banks or bankers, a mortgage broker's job is to find the best product or the lowest rate, not to promote their own product or rate.