September 20, 2020

Your Personal Mortgage Shopper

Leigh Doyle

Imagine if you could turn to an expert when you wanted to make a major purchase. He or she would visit stores, collect the important information about the product and then help you make the best choice. When you’re buying a new home or renegotiating your mortgage, this is what a mortgage broker can do for you.

“Basically, we shop around and find you the best deal,” says Paul Poirier, licensed mortgage broker, Dominion Lending Centres – Eagle Group in Concord, Ont. When you walk into your bank to discuss mortgage options, the banking officer can only offer you the products from that bank and, depending on your credit history and the product, knock a few points off the interest rate. But a broker has access to a wide variety of products because he or she can work with any bank, credit union or trust company. They also know who is offering the best rates for the type of mortgage you need and know how to negotiate for a lower posted rate.

“A broker, in theory, is educated in all aspects of mortgages,” says Christopher Molder, a mortgage blogger with in Toronto. By working closely with one, you access this specialized knowledge and experience. This is especially valuable for those who have hard-to-place mortgages—such as the self-employed or people with poor credit history. A broker will know what banks will be more favourable to the client or be aware of alternative ways to secure a mortgage, says Poirier.

Another benefit is the reduced impact on your credit score, he says. “Every time you go to a bank and they check your ability to get a mortgage, it’s a hit on your credit score. A broker will check your credit score once and then shop it to five or more banks at once.” If you do plan to comparison shop, this is one way to protect your credit from taking an unnecessary dive.

But how much will all this cost a homebuyer? Brokers are paid a “finder’s fee” — about 0.8 per cent to 1 per cent of the mortgage amount — by the bank or institution, which is not passed on to the person buying the mortgage. “The bank can afford to do that because of the volume they get,” says Poirier. “Since they don’t have an in-house person managing the account, answering questions, taking calls and sending paperwork back and forth, they save on costs and pass that on.”

With so many brokers on the market, it can be a challenge knowing which one to pick. Molder suggests you ask friends and family for recommendations and meet with potential brokers to see if they are a fit. Poirier says you should look for someone with a lot of experience.

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