So, you are considering buying property and will need financing to complete the deal. You have heard about mortgage brokers and mortgage specialists and are wondering if they are the same. No. They perform similar functions but are not the same. Here are some of the main differences.
Mortgage Broker
A Mortgage Broker is a person who shops at various lenders and acts as an intermediary. Mortgage Brokers have contacts with a number of companies and can find better interest rates based on your financial structure. They do all the “heavy lifting” and you reap the benefits of all their research and negotiating.
To work as a Mortgage Broker, the individual must have successfully completed a Mortgage Broker course and examination that is regulated by the province in which they operate. They are then licensed and are required to maintain certain ongoing educational requirements to stay in good standing.
A Mortgage Broker Single Point of Contact
A Mortgage Broker is a single point of contact. You will provide them with your information, and they can submit it to others for review and approval.
Because their contacts include banks of various sizes (including monoline or broker-only banks), credit unions, and even private lenders, Mortgage Brokers are able to provide a broader scope of the available funds for your purchase. This can mean a better interest rate at the time of closing. In addition, brokers will do all of the negotiating but will leave the final decision to you.
Mortgage Brokers get paid as a commission from the lender after the mortgage is approved. That means the borrower, you, pay no fee. However, if the financing is not a conventional loan, there may be some fees involved for the client. If so, you are advised upfront so that you have no surprises.
Mortgage Brokers are independent contractors with no ties to any specific lender. Mortgage Brokers usually are approached through a referral. A good reputation of favorable rates is excellent advertising to keep their business growing. Mortgage Brokers can make their own hours and be more available to accommodate borrowers.
Mortgage Specialist
This is an individual who works for a lending institution, like a bank, credit union, etc. They only have access to the funding provided by that facility and do not have access to other lenders. With limited financial resources, when you work with a mortgage specialist at a specific institution, you will be restricted to the rate they offer you. They have no access to other rates from other lenders.
Mortgage Specialists that are employed by a bank are not required to be licensed. Generally, they receive in-house training but are not required to have any specific educational levels or formal training. An experienced mortgage specialist will probably be very adept at their job, but there are no guarantees that you will be working with someone who has a strong background.
The Mortgage Specialist is an employee of the bank. In fact, sometimes specialists can earn a bonus based on certain criteria. Their only clients come through the bank generally from existing patrons. The appointment times are only available during standard banking hours.
As you can tell, there is much to consider when you are applying for a mortgage. Contact our team if you need help today.