In 2016, 57 percent of first-time home buyers in Canada got their mortgages from a broker.
The staggering figure, which was published in a recent survey by the Canada Mortgage and Housing Corporation, is indicative of a broader trend: more and more Canadians are choosing brokers over banks when it comes to purchasing or refinancing their mortgages.
People are choosing brokers over banks because brokers often can give personalized advice on a mortgage and shop around between lenders to find better deals.
This flexibility can really make life easier and help cut costs, but here’s the catch about brokers: it’s tough to find the right person for the job.
The quality of your broker will help make sure funds are ready when the deal needs to complete and determine your financial situation for the next few years, so if you’re looking to buy a new home it’s important that you find a broker who’s both qualified and trustworthy.
What Does a Good Mortgage Broker Do?
A good broker will help you figure out how much you can truly afford, determine what the best mortgage product is for you, and shop around for options that help you save money.
But their job doesn’t end there.
Your broker should also help you after review your mortgage a few times a year to see how you can pay it off faster, whether it’s still the right product for you, and if it’s still competitive.
Here are a few characteristics of good mortgage brokers:
- They’re always one step ahead of you
- They make your interests theirs
- They have good communication skills
- They deliver on their promises
- They have a positive attitude
- They listen to you and can give good advice based on your desires
- They stay in touch with you after you sign a contract
How to Pick the Right Mortage Broker
Choosing the right mortgage broker is easier using these steps:
Phase 1: Make a List
Write a list with the names of brokers you may know, you find and are referred to you. If you have co-workers or friends who have bought a home recently; or renewed their mortgage; ask how they liked working with their broker and who they were.
Ask your BC Notary, lawyer or Realtor for a referral for people they have worked with and they should be able to tell you fairly quickly who they know, like and trust.
You can also search online to find mortgage brokers in your area. We know a number of brokers and would be happy to provide some names of competent professionals to help you find the right fit.
Phase 2: Research
Before you even start talking to potential mortgage brokers, it’s important that you do some preliminary research.
Search online. A quick Google search will give you the names of mortgage brokers that operate in your area.
Many of these brokers will have websites and online profiles. High profile ones may even have peer-reviews posted websites like Yelp.
Visit their websites, check them out on LinkedIn, and read reviews. Doing this will give you insight into the the broker’s past work and reputation.
While you’re at it, do a quick search on the Canadian Association of Accredited Mortgage Professionals’ website. The organization also has an online directory that can help you make sure that the broker is accredited.
Ask around. Once you’ve created a shortlist of potential mortgage brokers based on your research, start asking around for reviews and recommendations.
Talk to friends, colleagues and neighbours, and see if they have worked with anyone on your list, or if they have anyone else to recommend. If someone has had anything less than a good experience with an broker, immediately cross them off the list.
Reach out. Once you have a list of potential mortgage brokers, it’s time to contact them. See what kind of vibe you get and ask if they have references from previous clients. If you get a good vibe, keep them on the list, and coordinate a time to meet them. If you don’t get a good vibe, cross them off immediately.
Phase 3: Interview, Interview, Interview
By the end of the research phase, your list of potential mortgage brokers should have at least three strong candidates. The next step is to meet up with them.
These interviews may seem intimidating at first, but remember: You’re in control. They have to impress you, not the other way around.
These interviews are important to figure out if the broker has the perfect balance between credentials and chemistry.
During each interview, make sure you ask yourself if this is a person you like and trust–and don’t forget to ask them the following four questions…
Four Key Questions to Ask a Potential Mortgage Broker
1. How long have you been in business?
While experience may not necessarily equate good service, it is important to know how long a mortgage broker has been in business.
Mortgage brokers with experience will generally have cultivated relationships with more lenders. This means that they will be able to shop around for deals from a wider pool of lenders.
2. How many lenders do you deal with?
Regardless of experience, good brokers deal with many lenders.
High-volume brokers can negotiate better deals, helping you find something that best suits your needs. Low-volume brokers may have less options.
3. What’s the application process like?
Many brokers offer online platforms that help you compare costs and easily apply for loans.
Be sure to ask about average closing times, specific requirements (credit score, down payment, debt-to-income ratio, etc.), and all documents you will need throughout the entire process.
4. What will my mortgage look like?
Not all mortgages are the same so find the one that works for you. Make sure to consider things like prepayment privileges, porting, and assuming mortgages as well as whether to go with fixed or variable rates. Is CMHC Insurance a consideration or can I have my property taxes collected with my mortgage payment?
Discussing these topics and asking broker’s opinion will help you get to know then; educate you and also show them you know what type of questions to ask regarding your mortgage.
Now that you know how to choose a mortgage broker, it’s time to go out there and start your search.
Good luck and have fun! Let me know if you have any questions or would like a referral.