Buying a home in Canada is one of the most expensive decisions you’ll ever make in your life. It’s also can be one of the most stressful.
You’ll be making decisions you’ve never made before and considering things you’ve never considered before. You’ll need to decide whether to choose a variable or fixed rate mortgage, whether that “possible lead paint” listed in the home inspection report is something to worry about, or whether your lender is giving you the best interest rate and lowest fees.
At times it might feel like you’re flying blind, and if it does, it means your bank isn’t doing their job.
This is where mortgage brokers come in.
A mortgage broker is a licensed professional who compares mortgages from a variety of lenders with the goal to find the best option for their clients. About 30% of Canadians use mortgage brokers to help them navigate the mortgage approval process, and that number is rising every year.
But a mortgage broker is so much more than that simple definition. They are your advocate, your source of knowledge, and your gateway into the complicated world of mortgages.
Not all mortgage brokers are created equal, and in honour of May the 4th, we’re going to look at five moves your mortgage broker should make for you if they have Jedi master level training. If your mortgage broker isn’t making these moves, it might be time to find a new one – or they might even be a Sith.
Providing Learning Materials
As a homebuyer, your biggest barrier to the mortgage process a lack of education. Applying for a mortgage is something you’ll only do a few times in your life, so it’s understandable that you aren’t an expert. That said, the more you know, the better decisions you’ll make, and the less likely you are to leave money on the table with your lender.
A Jedi master mortgage broker will take the time to educate you on your options. Your education will usually start at a sit-down meeting, but a great mortgage broker will supply you with a variety of take-home materials that explain every step of the process.
They’ll back up their statements with facts and figures, and everything should be laid out in a crystal clear manner.
If you have questions, your mortgage broker should provide concise answers and provide the appropriate facts to back up their advice.
A ClearHome approved mortgage broker provides a veritable bundle of learning materials that take you through the entire process. We’ll outline the most important factors about your mortgage like interest rate, term, and penalties, but also explain the minutia like how you can pay off your mortgage ahead of schedule.
Here is one of our best articles and downloadable reports:
Offering an Experienced Network
A good mortgage broker will take advantage of their network to provide you with the best possible advice. If your mortgage broker is more of a padawan in your specific type of real estate transaction, they should bring in a colleague (with Jedi master experience) who has the necessary expertise.
The ClearHome network of experienced professionals will help you avoid common pitfalls.
Your mortgage broker should work with a variety of lenders (you can ask for a list!) to get you the best rate possible, and they should work with you to review your options for paying off your mortgage faster. Many Canadians want to pay off their mortgage ahead of schedule, and your mortgage broker should check in with you yearly to review your options.
Offering the Full Range of Options
Did you that 60% of Canadians choose a five-year fixed term mortgage, and two-thirds of them end up breaking their mortgage early? That means most Canadians choose the wrong term for their lifestyle. A good mortgage broker won’t just offer you the standard five-year fixed rate mortgage, but will instead assess your situation and help you determine if a shorter term or a variable rate mortgage is a better fit.
Although these terms are less common, that may be simply because they aren’t offered to Canadians with the same frequency.
A good mortgage broker should offer you the terms that fit your circumstances, not just what’s popular and easy.
Save You Money
Of course, the ultimate purpose of a mortgage broker is to help you save money on your mortgage. A good mortgage broker will save you money in the following three key ways:
First, a Jedi master mortgage broker will help you secure the best mortgage rate. After a detailed discussion about your needs, your mortgage broker will help you choose between a fixed and variable interest rate, and will help you determine the best mortgage term. Once you establish the basics, your mortgage broker will shop for the best interest rate, which will often end up being several points lower than the posted rate offered by lenders.
This difference in rates could save you ten’s of thousands of dollars in interest over the term of your mortgage.
Second, a mortgage broker will help you find a lender with a lowest possible penalty for breaking your mortgage term early. As we mentioned above, a large percentage of Canadians break their mortgage terms early, resulting in penalties that could soar into the five-digit range. Mortgage penalties are not usually something new homebuyers consider, but it’s an important part of the equation.
A good mortgage broker will find a mortgage that serves your needs now and when it’s time to move.
Third, your mortgage broker should be with you not just for this initial mortgage, but also when it’s time to renew your mortgage. At the end of your term your lender will offer to renew your mortgage, but not at the best rate. Your mortgage broker will help you secure the lowest possible interest rate at renewal, so you can continue saving money on your mortgage.
Receptive to Feedback
Finally, your mortgage broker should actively solicit your feedback.
At ClearHome, not only do we ask our clients for feedback, but we publish it with a rating system so that new homebuyers know they are in good hands.
Our mortgage brokers carry the Verified Mortgage Planner (VMP) designation, which requires our mortgage brokers to be a part of the Canadian Association of Accredited Mortgage Professionals. The VMP designation also means our mortgage brokers must solicit and publish feedback from clients, which means you can be assured that a VMP certified mortgage broker is the real deal – we’re all Jedi masters at ClearHome.
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