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Mortgage Broker vs. Bank: Which Makes Sense For Me?

Purchasing a home is one of the most exciting experiences for first-time homeowners, but it can also be quite stressful.

mortgage broker meeting

Image Credit: Nik Macmillan

James Harrison, AMP
President / Mortgage Broker
Mortgages.ca

 

There are many steps to walk through before getting the keys to your new property, and a big challenge is securing a mortgage. Traditionally, most homebuyers use their own banks to finance a home purchase. In recent years, more mortgage holders have wondered if they should renew with a bank or look at other finance options. Let’s look at why more buyers are visiting brokers instead of a bank to refinance their home loan.

 

More Lenders & Options

As the cost of home ownership rises, buyers are looking for ways to save money. Bank representatives can only give homebuyers the services and rates offered by their company. On the other hand, mortgage brokers are not working for one lender but will work with 30 or more lenders from a variety of institutions, including major banks, credit unions, trust companies, and more. Your options are far more varied when working with a mortgage broker, and they do the work of researching and vetting for you.

 

Greater Knowledge of the Industry

Banks provide many different services to their clients, and while knowledgeable, representatives are not experts on mortgages and loans. Their expertise is limited to the bank’s services, policies, and loan structures.

Brokers specialize in mortgages, so they have superior knowledge of the industry as a whole. They work with tens of lenders and have an understanding of all the loans each lender provides. A mortgage broker’s job is to find the best options for loans and mortgage renewals, and they are always keeping up with the latest industry news and trends. So you can rest assured your broker can assess your needs and match you with the best mortgages.

 

A Mortgage Broker Works for You

A bank works primarily for itself, not its customers. The services are based on the institution’s gains, not on the client’s. Bankers make sure mortgage loans will not hurt their bottom line and will limit risks at all costs.  

Mortgage brokers work for their clients. Their job is to find the deal that best suits your needs. A broker looks at your situation, including your short-term and long-term goals, then helps you find a suitable mortgage from the right lender. They will go through all the pros and cons of each agency and answer your questions to ensure you have a clear understanding of the loan and lender.

Buying real estate is one of the most significant and expensive investments you will ever make, and struggling to find the right lender can add unnecessary stress. Whether you are a first-time homebuyer or you want to refinance your existing mortgage, a mortgage broker can help you choose the right lender to meet your current and future needs.  

While most consumers went to their own bank in the past, more homeowners are seeking the help of a mortgage broker. Good mortgage brokers are experts who work to find the best deal for each client. If you’re getting a mortgage or adjusting one, research different brokerages and full-time brokers that can help you. Read reviews online or ask your friends, family, co-workers, and realtor for recommendations.

 

For more information on how a mortgage broker can help you, contact Mortgages.ca today for your free, no-obligation consultation. You can contact us by phone at 647-795-8700 x 0, by email at info@mortgages.ca, or by visiting our website and clicking ‘Apply Now’ to speak to a mortgage broker today.

With a mortgage broker, you have nothing to lose and only great INSIGHTS to gain.

blog, Mortgage Education

Mortgage Pre-Approvals: Top 3 Common Myths [VIDEO]

If you’re preparing to take the next step in the home-buying process, a pre-approval consultation is a key first step that can save you time and money

pre-approvals consultation

Image Credit: Rawpixel

Pre-approvals are a CRUCIAL first step in your mortgage journey. If you’re a first time homebuyer, it’s completely normal to feel apprehensive about the process but this apprehension often stems from common myths (often learned through friends and family who are well-intentioned and eager to assist but may be misinformed). It is important to speak to a licensed and experienced mortgage broker who can provide prompt answers to your questions while understanding how home ownership fits within your long- and short- term financial goals.

 

The Pre-Approval Process

A pre-approval consultation is a very simple process that generally takes about 10-15 minutes via telephone or online application. In order to recommend the best mortgage rate and products, your broker will first need to determine your mortgage eligibility by verifying your employment and/or income (via tax returns, paystubs, and/or letter of employment).

For example:

If you are salaried/hourly, a broker will request:

  • most recent paystub
  • letter of employment
  • last two year T4s (tax returns)

 

If you are self-employed, a broker will request:

  • last two year T1 generals full
  • last two year notice of assessments (with confirmation of taxes up to date)
  • if incorporated, we will additionally ask for
    • last 2 year business financials
    • articles of corporation

 

Upon determining your mortgage eligibility, your mortgage broker will narrow down the products and rates for which you qualify and get you started on your mortgage journey.

 

Debunking the Myths

Click our video below to see James Harrison, President and Mortgage Broker for Mortgages.ca unpack 3 of the most common myths of mortgage pre-approvals:

  • Myth #1: Pre-Qualified = Pre-Approval
  • Myth #2: Pre-Approved = Unconditional Offer Time
  • Myth #3: Pre-Approvals Last Forever

 

For more information on how a mortgage broker can help you, contact Mortgages.ca today for your free, no-obligation consultation. You can contact us by phone at 647-795-8700 x 0, by email at info@mortgages.ca, or by visiting our website and clicking ‘Apply Now’ to speak to a mortgage broker today.

With a mortgage broker, you have nothing to lose and only great INSIGHTS to gain.

blog, Mortgage News

5-Year Fixed Rates Drop Due to Predicted Prime Rate Cuts

What does the arrival of a dropped 5-year fixed product mean for the variable versus fixed debate? Frankly, not much.

5-year fixed products drop over anticipated prime rate cuts

Image Source: Al x

James Harrison, AMP
President / Mortgage Broker

As of this week, economists are predicting the prime rate could actually start coming down. As a result, banks and lenders have been dropping the 5-year fixed rates and removing the discounting on the variable products so as to encourage clients to go fixed.


Don’t Be Fooled: We’ve Seen This Strategy Before

The banks have been aggressively pushing the 5-year fixed rates for the past 8 months now, using the fear over the last few rate increases as reason enough to consider the switch. But lest we forget: the 5-year fixed product is the most profitable product for the banks, not you.

When the prime rate goes up, banks systematically try to convince variable clients to break their mortgage and instead lock into a new fixed rate that is generally 0.75%-1.00% higher than the current variable rate. And based on 2018’s recent Mortgage Consumer Report, this fear mongering works — noting at least 68% of Canadians are talked into a fixed rate product.

But rest assured, when our variable clients call–panicked after a prime rate increase–our answer is always the same:

Our Clients: Do we lock in?
Us: No!

An Alternative (& More Effective) Strategy

Say NO to 5-year fixed but you should increase your payments as if you did lock in! This way, you are paying off your mortgage faster without the higher interest cost and terrible terms & conditions of the bank’s 5-year fixed product.

Speak with a Mortgage Professional

Regardless, you should always work with a professional and experienced mortgage broker in making these decisions. By definition, a mortgage broker works for you, independent of the bank’s interests.

If you’re considering a switch and your bank suggests a 5 year fixed rate product, make sure to ask them “why?” Think critically and get a second opinion from a mortgage professional. It’s your hard-earned money, it should stay in your pockets.

In Summary:

  • Go variable
  • Increase your payments from day one as if you went fixed and
  • Always stay loyal to yourself first–not your bank.

Let’s Connect!

For more information, click Apply Now, email us at info@mortgages.ca, or call 647-795-8700 x 0 today for your free, no-obligation consultation.

With the help of a Mortgages.ca broker, you have nothing to lose and only great INSIGHTS to gain.