With the importance of real estate in Canada, it is vital to understand how the various professionals in this sector operate when buying a home.
Sooooooo… what is the difference between a Mortgage Specialist & a Mortgage Broker? At the surface, they sound the same;
• They both arrange mortgages
• They both can offer advice and help you select a mortgage, right?
WRONG!!! There are many differences… Let’s check some of them out!
• A Mortgage Broker works for you! Their role is to act as a link between you and the lenders so that you do not have to spend your valuable time learning about mortgages and shopping around for the perfect mortgage. Mortgage brokers do the legwork and negotiate on your behalf for lenders. They are your point of contact for everything related to you financing your home.
o Bank specialists are employed and paid by the bank and work on the bank’s behalf.
• A Mortgage Broker can work with many different lenders across Canada – Big banks, Credit Unions, Trust Companies, Monoline Lenders (broker only banks) and private lenders – rather than working for one financial institution. Therefore, Mortgage Brokers can offer you more choices with competitive rates and terms.
o Usually, Mortgage Specialists only have access to their lender’s products. In a typical situation, homeowners could end up with a higher interest rate than what they could have gotten at other institutions. This occurs because the homeowner must negotiate for themselves and Mortgage Specialists are usually paid according to the rate they sell you.
• A Broker must successfully complete a Provincially regulated Mortgage Broker course and exam.
o Bank specialists are not licensed and require no formal training. There are no standards for educational requirements (although most Lenders do provide some in-house training).
• Because Mortgage Brokers don’t work for a specific lender, you get unbiased third-party advice about a variety of lenders.
o A bank specialist can only offer their own institutions products, good or bad.
o Specialists don’t have access to other lenders, so they won’t recommend another lender’s product offerings. They want your business whether it’s in your best interest or not.
• Mortgage Brokers use their knowledge and experience to negotiate the best possible terms and rates for you from a variety of lenders, based on the best fit for your situation.
o When you see a bank specialist, the mortgage negotiating is typically left up to you.
o Will the bank specialist negotiate on your behalf or on the bank’s behalf?
• For conventional financing, the services of a mortgage broker are generally FREE to you. If there is a cost, you will be advised of those costs up front. Brokers get a finder’s fee from the lender once they place your mortgage. Therefore, brokers are motivated to get the best terms and rates for their clients.
o Bank specialists are paid by their bank.
o Some banks offer bonuses if specialists get their clients to pay higher interest rates or sign up for other bank services.
• Mortgage Brokers work on a referral basis and are self-employed. Most of their business is done through word of mouth referrals, therefore a Dominion Lending Centres Mortgage Broker is motivated to ensure their clients are extremely happy and satisfied to keep their business growing.
o A bank specialist is generally an employee of the bank, generating business mostly through the bank’s existing customers.
• Most Mortgage Brokers are available for appointments or at least some sort of correspondence outside banking hours (nights, weekends, holidays) at their client’s convenience.
o Bank specialists are generally only available during regular banking hours.
• Mortgage Brokers are focused on your mortgage.
o Specialists are trained and rewarded on cross-selling. Some will push you to consolidate all your banking services with them when getting a mortgage (credit cards, insurance, RRSP, lines of credit, etc.)
Would you ask Tim Hortons, “What’s the best cup of coffee for me to drink today?” and expect them to name of some delicious latte from Starbucks? Not likely… So why would you ask a Mortgage Specialist at a bank to tell you which mortgage product is best for your situation?