Buying BC real estate can be expensive. Vancouver has some of the highest real estate prices in North America, plus you may need to consider the added cost of legal fees, appraisal fees, GST (if it's a new property) and property transfer tax. Fortunately, one cost you likely won't need to factor into your budget is using the services of a mortgage broker.
For 99.9 per cent of home buyers, there is no fee or cost to use a mortgage broker. Many home buyers I meet in Vancouver are shocked to hear this. They assume that using a mortgage broker, like many things in life, will cost them big bucks. However, mortgage brokers typically get paid a commission by the lender after closing, so home buyers never actually see or pay this bill. This also encourages the broker to work hard and help qualify you for a loan, because they won't get paid if you can't get a mortgage.
Despite being free to the home buyer, independent mortgage broker services offer plenty of valuable benefits and can save you huge sums of money. Here are a few areas where a mortgage broker can help:
- Comparing mortgages:A mortgage specialist at a bank can only offer you products and rates from that bank, so you won't have the benefit of comparison shopping through multiple companies which could potentially save you thousands of dollars over the life of a mortgage and ensure you are in a mortgage that is right for your needs and future plans. Independent mortgage brokers, on the other hand, work with many different lenders to help you find the best mortgage for your needs.
- Holding your hand throughout the process:Mortgages can be confusing. Should you choose a variable or fixed interest rate? What amortization period makes the most sense? When do prepayment penalties apply? A mortgage broker can walk you through the underwriting process and explain different loan scenarios so you understand exactly what you're signing. This is extremely helpful for first-time buyers who haven't taken out a mortgage before and may have loads of questions. It's also useful for self-employed borrowers or newcomers to Canada, who may have a more complicated mortgage qualification process and need a broker with experience in those areas.
- Helping you throughout the life of your loan.If you borrow money directly from a bank, you might speak to a different person each time you contact your lender. But a mortgage broker will service you over the course of the loan, so they can help you refinance, answer questions about mortgage portability and more.
These are just a few examples of the value mortgage brokers bring to the table. Many brokers are well-connected in the real estate industry, so they can also help by referring you to other professionals you need such as home appraisers, real estate agents and inspectors. At no cost (usually), a mortgage professional can save you lots of money, time and energy during the home-buying process.
But what about the 0.1 per cent who are charged a fee? Those exceptions might be if one or more of the three key elements of the application is in question: income, credit or property. Perhaps there is no income reported and the home buyer needs to qualify under an equity program. Maybe their credit is bruised or they do not have any established credit. Or maybe the property is a former grow-op or a complicated co-op situation. But even where the broker has to charge a fee, in any of those situations the client would not be able to secure lending on their own or through their bank at all so using a broker becomes even more essential in these scenarios.