Buying your first Canadian home can be a bit overwhelming. It goes beyond the size of the commitment. Finding the right mortgage can make the difference between your home purchase becoming an investment or becoming the biggest drain on your finances for years to come.
This is one of the foremost reasons the mortgage broker industry has begun to make a major difference in Canada. Whereas before you had to go to the bank or credit union to find a loan only a few years ago, now you can go to a Canadian mortgage broker who has the power to connect you with other investors as well as banks and credit unions.
There is no better way to get the best price and best structure available in Canada’s real estate market. In order for a broker to be successful, he or she must keep a constant watch on the various lending sources not only with within the province he or she is located in, but must remain connected with broader investment opportunities across the country.
Private investors, trust companies, finance companies, insurance companies and pension funds are just some of the additional options available in Canada that most borrowers would never know about if they went to the bank alone.
Mortgage brokers make a great deal of sense for a first-time home buyer. It’s quite rare for someone who is new to buying real estate to know the ins and outs of negotiating the right mortgage product for his or her situation. This is especially true in Canada, where a mortgage may have a multiple “terms” within one amortization time frame of say 25 years.
A Canadian broker is a negotiating expert. Even if the initial offer from a lender isn’t quite what you are looking for, a broker may be able to negotiate a deal that matches your requirements.
This is especially true in British Columbia. This province has the strictest mortgage broker licensing requirements of any province or territory in Canada. If you are purchasing a property in BC, a broker has training that competes with that of most bank lending officers, and exceeds the training of the mobile mortgage specialists may banks employ as outside sales personnel.
Your banker is banking on the fact that you think the bank is looking out for your best interests. Facts don’t bear this out. A Bank of Canada report released in February 2011 suggested that its loyal bank customers were paying higher interest rates. It appears they were doing this based on the general assumption that their bank was going to give them the best offer, so they didn’t feel they needed to explore their options.
This isn’t right, and that’s where a mortgage broker can help. Finding the best option is what a broker is trained to do. In fact, this is what a broker must do to earn a living. A banker isn’t motivated to give you the best deal in the marketplace. A broker is.
That’s not all a Canadian broker does for you. After a careful review of your financial information, an honest broker can protect you from overextending yourself. While there may be mortgage products on the market that would allow you to do so, a careful broker will advise you as to exactly how much you can truly afford.
There are so many different mortgage packages that a lender can offer you. A broker’s job is to help you decide which package is the best one for your short-term and long-term goals. That’s not something a banker is required to do by law in Canada.
Half of a percent may not seem like much to you, yet when you are looking at 20-years of payments it adds up to tens of thousands of dollars. And it is just such savings your mortgage broker is going to hunt for. That’s one good reason to consider a mortgage broker instead of a Canadian banker.
By Robert Charlson