The value of a mortgage broker
Whether you are looking to purchase your first home, refinance your mortgage or just found out you don’t qualify at your bank, there are a number of reasons you should consider using a mortgage broker (‘broker’).
Navigating the process of finding the mortgage solution that fits your financial needs can often leave you feeling overwhelmed. This is especially true if you recently went through a life event that impacted your credit score, you have non-traditional sources of income, or because you are self-employed. One way to navigate this uncertain time is to hire a mortgage broker you can trust to help you reach your goal of home ownership.
Who are mortgage brokers?
Unlike your bank’s mortgage specialists, who are employed by a specific organization and therefore mandated to sell that organization’s products, mortgage brokers have access to several lenders and can help connect you with one that has the best mortgage solution for you.
The right broker will represent your interests as a borrower, as they can have a wealth of knowledge in mortgage lending, both from formal training and experience. In Canada, brokers are required to complete formal training in the form of mortgage broker licensing established at a provincial level (e.g., Financial Services Regulatory Authority of Ontario (FSRA) or BC Financial Services Authority (BCFSA)). Furthermore, several provinces also require mortgage brokers to complete a re-licensing course for their license to be successfully renewed regularly.
In an industry that’s constantly evolving, mandatory licensing and re-licensing helps to ensure that brokers stay apprised of regulatory changes and possess the skills required to service their clients. This is an important element of educating brokers such that they can better guide clients through what may be the most significant investment of their lives.
Since January 1, 2018, the implementation of significant policy changes for regulated lenders has impacted the Canadian mortgage industry and its underwriting guidelines. Some of those changes have limited lending options available for many Canadians.
A broker’s role in alternative lending
Due to the tightening of lending regulations (commonly known as the mortgage stress test), it has become increasingly difficult for Canadians to qualify with major banks. The alternative market, which is made up of regulated lenders, unregulated lenders, private lenders and mortgage investment corporations, offer solutions for borrowers that the major banks are unable to service, such as making mortgage loans available to those with thin or bruised credit, or those who are self-employed.
Some mortgage brokers have worked hard to develop relationships with alternative lenders so that they can better serve their clients. Here at Home Trust, we only work with a select group of brokers; brokers that have been onboarded with us and have built a relationship with our team have the knowledge of our products to help close your deal with us as quickly and efficiently as possible. A skilled mortgage broker will understand which lender will offer you the best solution.
It is important to keep in mind that the process of applying for a mortgage with an alternative lender can be different from applying with a bank. For example, alternative lenders tend to have higher interest rates. Your broker can help you understand the difference between rate and payment and use their expertise to find you the right solution based on your circumstances. Alternative lenders may also require more documents to understand your whole story. Again, your broker can help you understand these requirements.
The right broker for you
It’s important to find a broker you trust. At Home Trust, our broker partners recognize the importance of client trust and work hard to understand the borrower’s entire story.
What do we mean by that? As an example, if a client experienced a job loss or other financial strain that affected their credit score, but the broker took the time to hear the whole story, the broker can attempt to show lenders that this was simply a bump in the road, and not a long-term setback. In one such case that was presented to Home Trust, the client had a new job within a few short months and was on the way to getting their finances back in order. Because the client was able to find another job quickly and had an employment offer letter in hand, together with their broker we helped them achieve their goal of home ownership. Another market that benefits from mortgage brokers are self-employed Canadians. As of March 2021, 2.7 million Canadians were self-employed and traditional financial institutions may not be taking the opportunity to market to this segment of the population. Brokers can guide clients through the process of finding an alternative mortgage solution that fits their needs.
Other individuals that can benefit from the services of a broker are those who aren’t familiar with the mortgage application process and what it involves.
When you’re ready, ask your real estate agent for a referral to a mortgage broker in your area. You can ask them about alternative options such as those offered by Home Trust for your lending needs.
The information, materials and opinions contained in this Blog are provided for your information only. This Blog does not constitute legal, financial or other professional advice and you should not rely on it as an alternative to specific advice based on your particular circumstance. This Blog contains links to third party websites. These links are provided for information and convenience; Home Trust does not endorse the content of any third party website, and it makes no representation or warranty as to the information on such third party sites. By clicking on any link to a third party site, you leave Home Trust’s website and do so at your own risk. Home Trust disclaims all liability for any damage or loss that results from your access to or reliance on information contained in this Blog or any third party site.