WHAT IS A MORTGAGE BROKER?

Mortgage brokers and associates are independent, trained professionals licensed to represent and provide borrowers with the best advice for your mortgage needs. Their job is to know and understand your financial situation so they can link you with the best-suited lender, ensuring you get approved and get a great rate. Mortgage Brokers are a one stop shop where they search and then negotiate on your behave to get you the best mortgage possible. Their goal is to save you money and time off your mortgage!

FIXED RATE VS VARIABLE RATE? WHAT IS THE DIFFERENCE?

This is a big question for everyone. Fixed rates are exactly how the sound “fixed” they remain unchanged for the term on your mortgage. The benefit of having a fixed rate is you will not need to worry about payment changes, or market conditions. Your rate will stay the same. Many people prefer this because they are able to budget more effectively. These rates are based on the bond market and will not need to be renegotiated until the end of your term.

Variable rates are how they sound as well, variable. They can go up or down. It is based on the prime rate and most programs offer 0 .4% – 0.75% under the prime. The benefit of a variable rate is it’s usually lower than fixed and your payments can be lower too. This can be nice to have the extra savings. You can use that money to pay down your principal faster. If you’re flexible with your monthly budgeting this can be a good choice.

The lower rate with variable is not guarantee because it is based on prime rate and when it changes so does your payment. Thus, your payments can vary from month to month. However, most lenders will offer you the ability to switch over and lock into a fixed rate without penalty if prime starts to rise.

WHY DEAL WITH A MORTGAGE BROKER INSTEAD OF GOING TO A BANK?

Mortgage brokers represent you, and not the lender. They are not employees of banks or other lending institution therefore they are not limited to the one product they can offer. Mortgage brokers seek out the best lender package to best suit your needs.

Banks can only offer their own financing products, which may not be in your best interest.   Mortgage brokers have access to variety lenders that specialize in different areas.  Where one lender may decline you the other will approve you, just because of their lending guidelines.

Mortgage brokers have access to many lenders outside of the Conventional Banks.  Most of these will not deal directly with the public and do offer some very competitive rate options.  Therefore, it is very important to work with a mortgage professional that will represent you and ensure the mortgage you get is the one best suited to your needs.  Mortgage brokers are trained professionals who can help you save on your mortgage dollar. Choosing the wrong mortgage can cost you literally thousands of dollars.

WHY ARE MY BROKER'S RATES LOWER THEN MY BANK?

Simply put, Banks are businesses and they are in the business of making money.  Most Institutions will try to get you to sign for a higher rate so they can meet their financial quotas.  Mortgage brokers get a break on rates because the lenders do not have overhead of an employee to process the paper work, pay them a salary etc.  We do this work for them thus enabling brokerages to receive preferred rates.  Plus they know mortgage brokers work in the best interest of their clients by shopping around for various rates, this keeps competition in the marketplace allowing for preferable rates and flexible products.

In addition, the Chartered banks are traditional sources of mortgage funding.  Mortgage brokers have access to trust companies, corporate and private pension funds. As well as, private sources of funds in which brokers often develop professional relationships with.  There are a large range of options to fit everyone.

Mortgage brokers are not paid based on the interest rate sold, but rather on the mortgage amount. Therefore, you are offered the lowest rate upfront.

SHOULD I APPLY TO MORE THAN BROKER TO MAKE SURE I GET THE BEST RATE?

When you apply to multiple firms you are having multiple inquires on your credit bureau which will have an effect on your credit score. Brokerages have access to the same lenders so if you have applied to many firms your file is probably going to be submitted to the same lenders. Most brokers will do the same analysis on your file and then pick the lender that will best suite your mortgage needs. Therefore you should pick one Brokerage that you feel most comfortable with.

If lenders and insures realize you have several mortgage applications then they will decline you. They do not look kindly on this action and will think you are wasting variable time of all professionals involved in the process. So, be sure to choose your broker wisely before applying for a mortgage.

HOW DO MORTGAGE BROKERS GET PAID?

For most lending Intuitions their employees are paid base on the interest rate given. Mortgage brokers are not paid based on the interest rate sold, but rather on the mortgage volume. Therefore, you are offered the lowest rate that is available. Mortgage brokers are paid a finder’s fee by the financial institution for which your mortgage is placed. In 99% of cases, broker’s services are offered to you at no charge!

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