Why use a mortgage broker? | Go back

Mortgage rates and products are constantly changing, and the Canadian market is more competitive than ever before. By choosing a mortgage broker you can access all your mortgage options with just one phone call, one application. Your mortgage broker works on your behalf to find the Right Mortgage® for your situation, and as an independent brokerage, a Mortgage Alliance professional can place your mortgage with whatever lender is the best fit for you, whether it’s a major bank or even a private lender.

A mortgage broker has expertise and knowledge that will guide you to make the right decisions about your mortgage needs. They also offer greater flexibility by being accessible outside of normal business hours and available to meet at a convenient location, often in your own home.

All this, plus these services are often at no cost to you (O.A.C.)!

Brokers get best rate

Bby Ellen Roseman - Toronto Star

Enio Lazzer works for one of the major banks. He gets an employee discount on bank products, including his mortgage. But when his real estate agent suggested using a mortgage broker, he decided to give it a try. He was trading up to a bigger home and wanted to get the best possible interest rate. Elisseos Iriotakis, associate vice-president of Mortgage Professionals Inc. in west-end Toronto, found him a very good rate. But Lazzer found his own bank was willing to match it. "I was going to stay with the bank, but Elisseos said, `Let me keep working on it.' He ended up doing far better than I could have on my own." The mortgage broker not only offered cheaper financing, but better service as well. "There was constant follow-up, right through to the closing date," Lazzer says. "I was a cynic about mortgage brokers, but now I'm a believer." Iriotakis is a certified financial planner, as well as a mortgage broker. He likes to help clients with tax issues. For example, Lazzer recently renewed his mortgage and cashed in some investments to pay it down. Then, he borrowed to invest, using his home as collateral. Using this strategy, some of his mortgage interest becomes tax-deductible. "I'm a chartered accountant and I know this stuff," Lazzer says. "But it was the mortgage broker who took the initiative. He looked at my mortgage application and asked the right questions."

Canadians usually go to their banks for housing loans. Fewer than half of first-time home buyers use a mortgage broker and only 25 per cent consult a mortgage broker when they refinance or renew. But mortgage brokers have access to low-cost financing that ordinary customers can't get. They're skilled at playing off one lender against another. The service is free to most borrowers. Mortgage brokers are paid commissions from the lenders with which they place the business. Iriotakis' firm is part of The Mortgage Centre chain of mortgage brokers, with 49 offices in Ontario. "Financial planning led me to this industry four years ago," he says. "I can integrate your mortgage with your short-term and long-term financial goals. You don't always get this kind of service when you deal with a bank."

Ann Pope, a mortgage broker with Assured Mortgage Services in downtown Toronto, works with many people who are buying investment properties. Only 2 per cent of her clients have impaired credit, traditionally the purview of mortgage brokers. "For most deals, I don't charge a fee. I get paid by the financial institution," she says. "But I have no problem when people ask me about fees." Pope has worked in financial services for 10 years. She's been on the other side, helping banks underwrite mortgages. As the owner of two investment properties, she uses her own experience to help clients. She's learned to take care in buying for rental purposes, making sure the fire exits are in place and the wiring meets current standards. "People see real estate as a quick way to make money, so I tell them my own story. I bought a house that had knob-and-tube wiring, which many insurance companies won't cover. "The home inspection didn't pick it up and I only found it later when doing home improvements. It cost $13,000 to get it replaced. "But I'm tenacious and got reimbursed for just under $10,000 by the home inspector. I wouldn't have paid the price I did if I'd known about the wiring." Jeff Brandman is a client of Pope's, referred by his real estate agent. She helped him get mortgages for two investment properties, then one for his own home. "I've never done a mortgage without Ann. She's totally on my team," he says. "I feel that she represents me, trying to get the best deal for me. The bank represents the bank, trying to get the best deal for itself."

Gerry Lodder is a partner in Diversified Business Group, a real estate developer. It buys and renovates apartment buildings in small towns, then turns them into condo buildings. "Our clients are investors, who buy two to three units at a time," he says. "We insist they put at least 25 per cent down and finance the rest. It's pretty conservative." Lodder sends his clients to Pope. She gets their financial information and finds mortgages for them, usually without meeting anyone in person. "She makes our job so much easier," he says. "Most clients are so busy they have no time to shop around themselves. And banks don't give them the same respect they give a mortgage broker."

Taddingstone Consulting Group did a report on mortgage brokers and asked hundreds of them how they do business. It found lots of choice for consumers. There are more than 5,000 mortgage brokers in Canada, including more than 2,000 in Ontario, up from a few hundred 10 years ago. "However, 60 per cent of brokers have been acting as a mortgage broker for less than five years," says Greg Holohan of Taddingstone. Until now, it's been relatively easy for someone to act as a mortgage broker. But Ontario is revising its legislation this fall to address this issue.

There's also a push in the industry toward higher standards. The Canadian Institute of Mortgage Brokers and Lenders has launched a designation called Accredited Mortgage Professional (AMP). Just under 45 per cent of Canadian brokers now have it. Another 35 per cent plan to get it this year. AMPs must have worked as a mortgage broker for two years and taken courses, including ethics. They also have to commit to continuing education. Brokers have different specialties. While 20 per cent say their role is to get the lowest rate and 25 per cent say it's to help credit-challenged borrowers, the majority (55 per cent) want to act as partners with clients to select appropriate products. The average mortgage broker deals with six lenders on a regular basis. You may want to ask which lenders they have actually completed a deal with in the recent past. Using a broker may help if you're in unsual circumstances, new to Canada or self-employed. Brokers tend to have access to interest-only mortgages or 100 per cent loan-to-value products, which are more typical of the U.S. market. Next Sunday, we continue our series on financial advisers and their clients by looking at help for parents in saving for children's post-secondary education.

Ellen Roseman's column appears Wednesday, Saturday and Sunday. You can reach her by writing Business c/o Toronto Star, 1 Yonge St., Toronto M5E 1E6; by phone at 416-945-8687; by fax at 416-865-3630; or at eroseman@thestar.ca by e-mail.