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What advantages do brokers offer over banks?

There are a lot of steps involved in buying a home. When it’s time to start thinking about securing a mortgage, you might automatically assume you should visit your bank to see what they can offer. While this may seem like the obvious starting place, it’s also worth exploring the world of mortgage brokers. Brokers offer distinct advantages over banks, but first you should understand exactly what a broker does. 

What do brokers do?

Sometimes, there’s some confusion about how brokers are involved in the mortgage process. Brokers are mortgage professionals who help connect clients with potential lenders who might suit their needs. Brokers are NOT lenders, but they act as a middleman between clients and lenders. Brokers review your situation and make recommendations for you, get you in touch with lenders, and help negotiate on your behalf. 

What benefits do brokers offer?

Unbiased advice

When you’re searching for a mortgage, on the surface, it might make the most sense to go directly to someone who can provide you with a mortgage, such as a bank. However, lenders will actively try to persuade you to commit to their products, because it benefits them. While this isn’t a crime by any means, it does mean you won’t be getting an unbiased picture of your situation and what you can expect. 

Are you unfamiliar with the market, or aren’t sure what kind of product or rate would serve you best? Mortgage brokers will lay all your options on the table to find an option that fits you best. Brokers receive a commission when they connect a client to a lender, but these commissions are standard across the industry. This means a broker has no reason to push you in any direction, because their pay won’t be affected either way. It’s good to have unbiased advice for something as important as a mortgage, so you know you’re making a fully informed decision. 

Access to more lenders

When you go to a bank, they won’t recommend you visit another lender. They will try to push you towards their services, since every other lender is a competitor. Brokers, however, have no competition with lenders. This means they can help connect you with several lenders who offer different services that might work for you. For example, your bank obviously won’t suggest you check out a different bank to see if they can provide you with a different loan. On the other hand, a broker can connect you with both of these lenders if it makes sense for you. Since brokers are responsible for connecting and interacting with lenders, they have access to people all across the industry that traditional banks wouldn’t recommend.

Negotiate on your behalf

The real estate market can be confusing, especially for a first-time home buyer. If you’re feeling overwhelmed by the prospect of doing so much paperwork and negotiating with lenders for a suitable rate, brokers are your solution. Once you fill out an application with a broker, they use that for all lenders. This prevents you from having to fill out multiple applications with each lender you would otherwise have to visit independently. Brokers also act as your negotiator, working with lenders to help secure a product for you. It can be a huge relief to have brokers available to do lots of the negotiating and discussions for you. 

More flexible

Banks can be pretty traditional with the types of clients they will work with. For example, a person who is self-employed, new to Canada, or doesn’t have the best credit history, might struggle with a traditional lender. Brokers offer their services to all clients to help find them a lender that works, even if this means looking into private or alternative lenders. Even if your application isn’t perfect, a broker will do their best to help you secure a mortgage. As more people move to Canada and start their own businesses, the traditional model doesn’t fit as well anymore. Brokers are flexible and current with their clients. 

Better rates

Finally, mortgage brokers might be able to secure you a better rate than you would get if you went to a bank independently. Lenders sometimes provide discounts to brokers, which, in turn, are passed to you. Plus, if you need to go with a lender that’s not a traditional bank, these other lenders might already be offering lower rates you wouldn’t know about on your own. 

Brokers offer big advantages over traditional banks, and you can be sure you’re getting the best advice and guidance from them. If you’ve booked an appointment with a broker, you should also know what to expect during the first meeting. The path to securing a mortgage can be exciting and intimidating, but either way, it’s smart to have a broker by your side!

If you have any questions about buying a home, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.