Mortgage brokers are lending middlemen who acquire mortgages for homeowners. It’s what they do all day, every day. After collecting all of your financial information, a mortgage broker will shop around at the many available lenders to help find the best mortgage product possible, so that you can secure your new home.
Wondering which questions you should ask a mortgage broker? Here are the top three questions to ask to make sure you’re getting a great deal for your home loan.
1. How does your application process work?
Transparency around the mortgage application process is crucial, especially for first-time home buyers who’ve never obtained a mortgage before and never used a mortgage broker or agent before. Even if the application process seems straightforward, you need to know exactly what’s involved so there are no surprises.
A few good follow-up questions to ask a broker would include:
- What are the documents needed at each point in the loan process?
- What third-party fees and lender fees will I have to pay?
- Is there an online platform for uploading documents and tracking my loan progress?
- On average, how long does it take to have a home loan approved?
2. Do you charge for your services?
The answer to this question should be a categorical “no!”
Mortgage brokers in Canada are paid directly by the lender, so they should charge you a fee for their services. But that doesn’t mean a mortgage broker will never charge a client a fee. Under unique circumstances, a mortgage broker will charge a fee but this typically happens only with complicated or speciality loans. Any fees or charges should be discussed upfront before any work is done.
For the vast majority of borrowers, however, mortgage brokers will receive a referral fee from the lender and not charge a fee to you, the client, for their services. The referral fee from a lender is, on a basic level, calculated based on how much you borrow and the term of loan you select. Other factors include the broker’s rate of denials (the number of clients denied by a particular lender) and the rate of cancellations (the number of borrowers who break their loan term), so it’s in a broker’s best interest to get you the best rate, with the best terms that suit your needs.
3. Can you help me even if I have bad credit?
Short answer: Yes!
Mortgage brokers are excellent at helping people who have been turned away by major banks because of less than perfect credit, due to a small down payment or because they’re self-employed. The fact that mortgage brokers work with various lenders means they are well-positioned to know which lender will be more amenable to your situation.
A mortgage broker who is put off by your situation isn’t someone you want to work with. What you really want to hear is that they’ve got multiple lenders at their fingertips and they’ll help you work through your unique situation to secure a positive outcome — and that includes providing a plan to help out a borrower with bad credit.
Mortgage brokers are different than mortgage agents. Agents work for one lender, such as a bank, and are limited to the criteria set by that lender. Mortgage brokers, on the other hand, can help you find the best home loan by shopping around the many available lenders and mortgages on your behalf. Don’t just choose the broker who can quote you the lowest rates and fees, use a broker who will work hard for your services, so you can feel confident in referring them to family and friends.