Why Do We Need to Hire Mortgage Brokers Instead of Approaching Banks Directly?
The mortgage industry in Canada comprises several different mortgage lenders including mortgage brokers and mortgage bankers. As a result, getting a mortgage is not a herculean task to suit your individual needs due to the availability of mortgage brokers because it is not only a complex process but also requires a lot of effort.
Nowadays, most people prefer opting for mortgage brokers due to many reasons. The foremost one is quick customer handling with minimal documentation. They help their clients from the initial inquiry until the settlement. In addition to this, they work closely with borrowers throughout the mortgage process.
Throughout the globe, the mortgage market size is likely to increase dramatically in 2027. According to verifiedmarketresearch.com, in 2019, its value accounted for 5.52 Billion USD dollars; it is forecasted to reach USD 22.30 Billion by 2027, and its growth is at a CAGR of 19.1% from 2020 to 2027.
How Mortgage Broker is Different From Bank?
Being a middleman, the mortgage broker deals with various lenders and charges them a referral fee. Conversely, banks have direct connections with the clients, which offer mortgage rates that their company support. In British Columbia, Mortgage brokers must possess a mortgage license in advance to provide mortgage services and they are required to apply for registration within one year of the mortgage brokerage examination.
Mortgage Brokers VS Bank: -
| Mortgage Broker | Bank |
Market Share | 47% | 53% |
Definition | Licensed mortgage specialist has access to multiple lenders and mortgage rates. | It deals with the Chartered Banking Institution and also facilitates personal banking, mortgage services, credit card, and loan. |
Lender | No | Yes |
Puts Application Together | Yes | Yes |
Examples | Alpha Mortgage House Corp, Safebridge Financial, The Mortgage Centre | TD, RBC, BMO, CIBC, Scotia, Tangerine |
How Mortgage Brokers’ Benefits Outweighs Banks: Pros of Mortgage Brokers:
1.They Provide Free and Financial Advice:
They do not charge the consumers even a dime while imparting their services. They are the experts in the mortgage industry who can give an honest assessment of your affordability after examining your financial information. They may also help you to connect you with a real estate agent to assist you to find the appropriate house.
2. They are Efficient:
They are so efficient that after assessing your financial information; they can find the loophole that may obstruct you from getting the mortgage and offer you the remaining options by explaining the pros and cons of each one.
3. They Negotiate on Your Behalf:
Most banks negotiate only some terms on their loans; however, each bank has its own criteria on what things they negotiate. Instead, a mortgage broker can negotiate better terms for any type of mortgage.
4. Easiness in Consultation:
You can set up a meeting with a mortgage broker as per your requirement; it can be in person or over the phone. Required documents can usually be sent through email to start the mortgage process.
5. A Broker May Save Your Legwork:
Top mortgage brokers always remain in contact with numerous lenders and some of them you may even not know about. Nonetheless, they may deprive you of certain lenders on some inconvenient payment terms.
That’s why it is necessary to do some before conducting a meeting with the broker in order to make yourself aware of the latest mortgage rates. Additionally, if you want to research the rates online then you can use the mortgage calculator to get an idea as well as provide mortgage rates comparison from different mortgage brokers.
6. Offers Access To Hundreds of Loan Products:
They are not just limited to providing a single mortgage; however, there is a wide range of mortgages that always remain inside the basket of mortgage services. The more experienced brokers, the better will be for you to obtain the loan product.
7. They Will Offer Better Rates:
The chances of lower mortgage rates are greater in the case of mortgage brokers because they receive volume discounts from their lenders if you will try to negotiate with them.
8. They are Independent:
Mortgage brokers are the professionals who bring mortgage borrowers and lenders together. They are independent mortgage personnel who do not work for individual lenders; as a result, they offer impartial advice on which mortgage products will be suitable for you along with knowing your potential to afford the mortgage amount.
9. They Monitor The Process Thoroughly:
The process of getting a mortgage is quite identical throughout Canada; however, fine details vary from province to province. The mortgage approval process commonly lasts approximately 11 to 25 days in Canada. So, if you want to get your mortgage approval faster as a first-time home buyer then consider starting the process faster. Throughout the process, the mortgage broker is liable to monitor the necessary work.
During the monitoring process, they research the market to check the source of mortgage product that is suitable for the client i.e. borrower, collect all relevant documents, submit all the required documents to the lender, and more.
10. They Deal with Bad Credit & Help the Clients:
Different types of lenders have their own requirements in context to the credit score such as insured mortgage demand minimum 600 credit score. If you have an issue with bad credit, a private mortgage lender is the best option to get the mortgage because several private mortgage lenders do not have set any minimum credit score requirements to provide mortgage services; nevertheless, such mortgages will have higher interest rates as well as higher fees.
Pros of Banks: -
1. Focus on Mortgage:
The mortgage is the only product that banks offer, which enables them to develop extensive expertise in regard to the processing and closing of the mortgage.
2. Offer Aggressive Terms and Conditions:
As banks solely focus on mortgages, they provide highly cutthroat loan terms alongside the effective price framework and direct lending calibre. Often, mortgage banks offer attractive loan terms as compared to credit unions or large banks.
3. Direct Lender:
As mortgage banks are direct lenders, they have more control over the funding process. This also improves the mortgage process efficiency because the bank may already know a client’s credit card history, account balances, investments, etc.
4. Peace of Mind:
Banks are stable against financial instability. Nonetheless, they have to meet the federal underwriting guidelines.
Alpha Mortgage House Corporation is a Mortgage Broker in Surrey, BC. We provide mortgages for Home Purchases, Project financing, Second mortgages, Commercial mortgages, Mortgages for first-time home buyers and more. Alpha Mortgage is a one-stop solution for all your mortgage needs. Our team works with top lenders to provide you with the best financial options.