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Now you can listen to our blog post, “Should I Work With a Bank or a Broker For My Mortgage?” while on the go.
You’ve heard a lot about mortgages and have probably taken a few out in the past. You’ve had some good experiences but more than likely you’ve also had some not so good ones as well. The question you are asking yourself right now is should I work with a bank or work with a broker for my mortgage in Canada?
The Most Common Mortgage Types
Buyers who are making their first purchase
The most obvious reason for requiring mortgage negotiation is to finance the purchase of a home. Congratulations if this is your first home! There are sometimes incentives for first-time buyers who are just getting into the market.
Buyers who come back again and again
Maybe you’ve just sold your old house and are ready to buy a new one. You’ve gone through the procedure before and picked up some tips along the road. However, keep in mind that if you break your contract early, you may face fines.
Perhaps the term of your mortgage has come to an end. It’s now time to renew. In this circumstance, you can either continue with the lender who authorised your first mortgage or shop around. You may be able to acquire a better rate or adjust the terms without penalty if you wait until your renewal date.
You may want to refinance your mortgage loan to increase the amount of money you have accessible. If you want to consolidate debt or start a home remodelling project, this can be a terrific alternative. You will need a home appraisal to determine the value of your property if you want to increase the amount of your present mortgage.
This option, which is only available to seniors, allows homeowners to cash out a portion of their property’s equity to utilise for living expenses, travel, house repairs, and other needs.
What is My Bank’s Role in My Life?
When a mortgage application is initially mentioned, most individuals immediately think of their primary bank. The top five banks in Canada (RBC, TD Bank, Scotiabank, BMO, and CIBC) are well-known and reliable sources of financial services, including mortgages. Working with traditional banks has a number of advantages:
Convenience: People prefer having all of their financial resources in one place and feel comfortable with a bank.
Location: Many individuals prefer having a physical location in their neighbourhood.
Face-to-Face Communication: A type of communication where two people meet face-to-face. It’s generally beneficial to be able to speak with someone who is familiar with you and your family. Your mortgage specialist will be able to access information that offers them an overview of your overall financial picture if you already perform your day-to-day banking there.
Benefits of Bundling Services: You might even get bonuses like no account fees or a free safety deposit box with your mortgage. It’s even possible that you’ll be able to get a second home equity line of credit after you move in to aid with upgrades.
A-lenders: A-lenders are banks. They choose low-risk borrowers with excellent credit scores. A-lenders may offer the best rates, but they also have the most stringent policies. As a result, your bank may not always be able to provide you with what you require.
You may be offered higher-than-advertised rates at the bank unless you are willing to haggle, which we recommend. If you want to visit many banks in your neighbourhood, you’ll have to schedule multiple visits and risk damaging your credit.
A mortgage broker may have a greater chance of finding a lender for you if you are self-employed, have a low income, have a lot of debt, or have a history that includes a recent bankruptcy.
What is a Mortgage Broker’s Role in My Life?
A mortgage broker is a certified professional who can help clients obtain a mortgage. They serve as a go-between for you and a possible lender. When they employ A-lenders, they don’t have to pay anything because the lender pays them when the loan is closed. They must keep their qualifications up to date on a regular basis, albeit the requirements differ by province.
Mortgage brokers are obtaining a larger portion of the market, according to the Canadian Mortgage and Housing Corporation’s 2017 Mortgage Consumer Survey:
- Refinancers, 40 percent
- First-time purchasers, 55 percent
- People renewing their mortgages, 35 percent
- First-time buyers, 40 percent
- Repeat buyers, 40 percent
Whether you choose a bank or a mortgage broker, your lender will calculate your mortgage amount based on your income and debt burden.
It is critical to educate oneself while determining where to pursue your mortgage. Lenders want to ensure that you’ll be able to cover the payments, therefore interest rates are rising and requirements are tightening.
A lower interest rate can result in annual savings of hundreds of dollars. Before consulting a mortgage consultant, learn as much as you can about the language and your available options. This will help you figure out what kinds of questions to ask.
Determine the amount you’ll be able to put down and the monthly payment you’ll be able to make ahead of time. You may even check your personal credit score to ensure that there are no unpleasant shocks when you meet with your lender. For a little price, you can do this through organisations like Equifax and Transunion. It does not count as an inquiry on your credit record if you do it yourself. When looking for a mortgage, keep in mind that each time a lender pulls your credit record, it can harm your score.
Begin by obtaining pre-approval. If you are turned down, you can work on improving your financial status before looking for a home. A mortgage broker is generally eager to assist you in devising a strategy for getting your finances in shape before reapplying.
The Bottom Line
At Lionsgate, we specialize in helping people get the extra cash they need, obtain funding for private mortgages, as well as for other real estate transactions. If you are looking to buy land in Canada, get a mortgage or apply for a loan, fill out the form below. Or, You can leave us a message and we will try to connect you with local lenders and sources that best meet your needs.
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