Top 5 Reasons To Use a Mortgage Broker

1. This is a rule of thumb with regards to obtaining a mortgage for everyone–NEVER go to your local bank! The big 5, CIBC, RBC, TDCT, BNS or BMO. If you are someone worried about high interest rates then you should know that they will NEVER be able to beat the rate of that of financial institutions. (i.e. FirstLine, ING, MCAP, MacQuarie…the list goes on!) they currently all have a lower 5yr fixed than any of the big five banks! You can ask anybody in the real estate industry–ask your Realtor, ask your mortgage broker, anybody in the industry, we all know that when we get a mortgage for ourselves, we will NEVER go to our local banks! As they can NEVER provide the rates that other financial institutions can. And even if they do match a rate of that of a financial institution you must look a little deeper as to why. For example ING has their 5yr variable at Prime – .75% and TDCT for example also provides Prime – .75% (with special approval from head office, if you are a client of TDCT then you can get this rate, you just have to dig a little) but TDCT calculates their interest compounding monthly while ING calculates their interest compounding semi-annually not in advance. This isn’t visible to the average client but the difference between a semi-annually mortgage vs. a mortgage on a monthly compounded format is huge! Were talking in the thousands just over the short term of 5yrs. Just think of semi-annual being a normal mortgage and monthly-compounded mortgage being calculated like a credit card! Interest is being calculated on the higher amount after you pay down per month! as opposed to once a year! Another thing that everyone should be aware of when going into your local bank is to be prepared for the spiel! The spiel is as follows: “Hi Mr. Client, I seen that you have been banking with us for X amount of years so I’m going to give you a discount on our 5yr fixed mortgage rate. I’m going to give you a discount of .5% below our posted rate, how does that sound?” What Mr. Client doesn’t know is that banks NEVER give out the posted rate. Right now the current posted rate for the majority of the big 5 banks is 6.99%, which NOBODY applying for a mortgage will get, providing your credit score is up to par. The banks have a posted rate/ceiling rate and a floor rate. The floor rate is the absolutely lowest rate they can give you, so each banker will try to get away with the highest rate they can get away with. I myself did some shopping around for myself just to see. I applied at one RBC they quoted me 5.74% on there 5yr fixed then I went down the street to the other RBC and they quoted me 5.69% and then I called the customer service line on the back of my bank card and they quoted me 5.59%. Now how is this consistent? They also mentioned my tenure with the company but I just started banking with them this year! Banks do not only want to have your mortgage business they want to do your investments, they want you to open new savings accounts etc. They want to get all your business and all your money, so yes, they do have a hidden agenda!

From my past experiences, even with my closest friends, they tell me, “Sterling, I’m going to my bank because I’ve been banking with them my whole life and they said they will give me a discount on my mortgage rate!” What I told him was, don’t be another victim of the classic spiel that they tell all their clients, fact is you aren’t special, you are client number 870,850. In the United States over 70% of people use mortgage brokers in Canada its 26% This needs to change! The reasons are clear, even The Donald uses a mortgage broker and he’s a billionaire with enough real estate knowledge! I’ve also heard, “Sterling if you get me a mortgage send me to one of the big 5 because I don’t want to go to a “no-name” mortgage company in case they go bankrupt!” What I have to say to these types of mind sets is, if they go bankrupt, who cares? Whats the worst that can happen, they go bankrupt then you don’t have to pay back the mortgage. The only thing you need to worry about is that they release funds to the lawyer on closing date! Realistically even if the mortgage company does go bankrupt you will still need to pay the mortgage, but I’m just theoretically speaking. Most of the financial institutions are owned by the big 5 banks in some way so don’t worry, there still getting paid!

Acutaly, I can’t say don’t totally neglect the big 5. Only go to the big 5 unless you have to. When I mean have to I mean if they are the only ones offering a solution to your unique situation. Your mortgage broker will know best and place you accordingly.

I just can’t emphasis enough the lack of education in mortgages within Canadians! The big 5 have our trust, and us being Canadians are either mis educated or are just too conservative so we just automatically assume that our banks are looking in our best interests. Do yourself a favour and use a Mortgage Broker!

2. Our services are FREE! All our services are free unless you have a unique situation or if your credit is shot and we need to bend over backwards to finding a lender who will lend out money to you. This requires more time and energy so us mortgage brokers will add a fee anywhere between .5% – 5% depending on your situation.

3. Most of the major financial institutions who provide these low rates ONLY deal with mortgage brokers. I had a friend ask another friend of mine, “how does Sterling get these low rates? How does he have more connections than a bank manager?” Well the answer is some has to do with having the right contacts but the largest reason on how we can get better rates is because us mortgage brokers can go outside of the big 5 banks to provide you the lowest rates! Almost all mortgage brokers can provide the rates that I do, so if you don’t choose to go with me…Find a mortgage broker near you and find a good one and they will guaranteed find you a better rate than your bank. Having connections or not!

4. 2 in 1 – We play two roles here. 1. We do the shopping for you finding you the best rate. Really, who has time to go to all the big 5 banks and do research on the other 35 lenders out there. We do, this is our lives, this is what we know best. The market and rates change everyday, unless your willing to drive out to the big 5 banks and call 35 lenders everyday there is NO way you will be able to know who is offering the best rate and when. The second role we play credit counseling so you can make the right financial decisions moving forward with regards to your overall financial situation. And if you don’t qualify for a mortgage we will tell you the step-by-steps you need to take in order to get yourself into a mortgage. Most of us mortgage brokers have a background in credit counseling and we are very familiar with credit scores and how they operate. We know how to get you to the 700 beacon score…just ask!

5. We work 24/7 – Unlike the banks we work on evenings and on the weekends, we will come to your house and provide you with the best service possible!

6. I know this is a top 5 list but I can’t emphasis this enough…RULE #1 NEVER GO TO YOUR LOCAL BANK FOR A MORTGAGE! Us Canadians need to be informed on this and if you are a mortgage broker reading this you need to educate all your clients as well! The big 5 has roughly 70% of the market share out there. This number is decreasing as Canadians are being more educated, but this is far from where it needs to be! I’m not saying to be like the United States, but they are usually ahead of our time, so if 70% of them are using mortgage brokers then why are we? I know I personally got my mortgage through a financial institution…Where did you get yours?

If you have any questions please contact me directly at 877.979.4979 or sterling@xpx.ca this will probably be my last entry for awhile. So for now, I’m taking a break!

Also please visit my other two business that I run. Thanks for your support!

Xpress Property Xchange (XPX.ca) and ShiftRealty.ca

Best Regards,

*Sterling