Buying a home is likely the most significant (and costly) purchase that you’ll ever make. So, unless you’ve been lucky enough to win the lottery or inherit a bunch of money, you’ll probably need a mortgage to pay for it.
When it comes to taking out a loan of this size, even a 0.01% change in interest rate can mean thousands of dollars. With this much money in the balance, it makes sense to consult with an expert –– that’s where a mortgage broker comes in. A mortgage broker can help navigate this critical process to help you find a mortgage that is perfectly tailored to your needs.
In this blog, we’ll be covering everything you need to know about mortgage brokers. Keep scrolling to learn about:
- What a mortgage broker is
- How their services benefit home buyers
- If a mortgage broker is right for you
- Alternatives to a broker
What is a mortgage broker?
Think of a mortgage broker as the middleman between you, “the borrower,” and mortgage lenders. When you decide to deal with a mortgage broker, you definitely won’t be short on options –– they have access to multiple lenders, which gives them the ability to provide you with a one-stop-shop of the market.
Dealing with a broker can give you access to the following types of lenders:
- The big banks
- Credit unions
- Trust companies
- Alternative Lenders
- Private lenders
To find you the right mortgage, your mortgage broker will get to know you, your needs, and your financial situation. They use this information and their industry expertise to match you with the lender and mortgage product that best fits your requirements.
Why use a mortgage broker?
A mortgage broker can significantly improve the process of securing a loan for your home. Let’s take a look at some of the reasons to use a mortgage broker:
1. One-stop-shop: One of the best perks when it comes to dealing with a mortgage broker is their access to a large number of lenders. Unlike banks or credit unions that only have access to their products, a mortgage broker deals with multiple lenders –– this gives them the ability to shop your rates with a large portion of the market in-house to ensure that you’re getting a competitive rate.
2. Better rates: Yes, brokers shop the market to find the best rate for your mortgage, but that’s not the only thing they can do for you. Another way they can secure lower rates is through the volume discounts that they receive from their top lenders. So, if a broker can offer you a lower rate on a mortgage due to a volume discount, you won’t be able to secure that same low rate if you were to go to that same lender directly.
3. Expert advice: Securing a mortgage to purchase a home is a big decision. So, wouldn’t you want an expert to guide you through the process? Mortgage brokers are licensed professionals with a high level of expertise in securing mortgages for their clients. They bring the expert knowledge needed to get you a mortgage specifically tailored to your needs AND at the best rate, so you don’t have to navigate in unfamiliar waters.
4. They work for you: This may not seem like a big deal, but trust us, it is! Because mortgage brokers work for you and not the lenders, they can give you impartial advice, so you can be sure that they’re giving you guidance that is in your best interest..
5. It’s free!: And we saved the best for last. With all the benefits provided by mortgage brokers, you would think you would have to pay a service fee, right? Well, you don’t–mortgage brokers may work for you, but it’s actually the lenders that typically pay them when they secure you a mortgage. Only if you need alternative or private financing would a fee be involved.
Is a mortgage broker right for me?
Nearly 50% of Canadians think so! As we’ve outlined above, there are tons of benefits associated with using a broker to secure your mortgage. And guess what? There’s almost no downside.
Using the services of a mortgage broker doesn’t lock you into a contract, either. If you don’t like the service or mortgage options provided, you can always take your business elsewhere. Brokerages don’t all work with the same lenders, so another brokerage may be able to offer you access to different lenders and mortgage products that better suit your needs.
What’s the alternative?
Using a mortgage broker is an excellent choice for obtaining a mortgage, but it’s not the only option out there.
You can also obtain your mortgage directly from any of the following types of lenders:
- Your current financial institution
- Any of the other big banks
- Credit unions
- Trust companies
- Alternative lenders
- Private lenders
It’s great to have other options, but there can be some issues associated with going directly to the lender. A mortgage broker, on the other hand, can ensure:
Your financial institution is offering you the best rate
Going directly to your current financial institution and securing a mortgage through them is likely the easiest route to go down if you’re not using a mortgage broker. They will already have most of your financial details required to obtain a mortgage on file, plus you may also qualify for discounts for having multiple products with them. The major downside is that they won’t always have the lowest rates or most flexible products available. Your mortgage broker will ensure you’re being offered the best mortgage product for your specific needs.
You’re getting honest, unbiased advice
Unlike a broker, the lender doesn’t work for you, so you may not be getting impartial advice when you shop directly with them. It is a broker’s job to find the best mortgage to fit your needs.
You understand all of your options
Another potential problem to consider is the time and effort it takes to shop directly- it’s a lot of work! A broker has access to many lenders, giving them a more holistic view of the market and the ability to shop your rates in-house. To do the same amount of shopping by going directly to the lenders, you need to be willing to spend a ton of time on the phone and doing research. A mortgage broker can ensure you know about all the options that apply to you.
Plus, even if you spend all the time and effort required to shop for the best rates, there is always the chance that a broker may be able to offer a better one due to their volume discounts.
How can the brokers at Pineapple help me?
The mortgage brokers at Pineapple are some of the best in the industry. They are mortgage experts who pride themselves on their excellent customer service and ability to identify the ideal mortgage product that is most suitable and tailored directly to your needs.
Pineapple brokers can do this because we work with Canada’s leading lenders – including banks, mortgage firms, trust companies and private lenders – giving us access to some of the most competitive interest rates and mortgage products available.
Want to learn more about how Pineapple can help you secure your mortgage? Get in touch with our team today!