I'm currently in the market for a condo as a first time home buyer (albeit in Toronto), and have heard some good things about mortgage brokers (rates), while also hearing some bad things (ie: not doing their due diligence beforehand, no after sales support, high fees, etc). Having said this, I came across a website, www.ratespy.com and wonder what the purpose of a mortgage broker is if the best rates are available online with smaller institutions? Some background on what I'm looking for: 25 year amortization and 2 or 3 year term (probably fixed). Beyond that I may keep the condo or sell if my life situation changes (ie: marriage and need of a larger place). With this though, I've also heard that some brokers charge fees from the customer, rather than compensation from the FI, and if you go with a smaller institution, there may be large discharge fees the broker may not tell you about.
So my question is, is it better to shop around yourself, or go for a broker? In addition, larger institution, or smaller one? What are the advantages here for my situation?
First time I used a broker, because I didn't know what I was doing. Mine was helpful afterwards when the mortgage lender messed up all kinds of things (monthly payments when I requested bi-weekly, then randomly changing the day of the week the payment came out of the bank). I told my broker what was going on and the next day, it was fixed with no more hassle.
When I renewed, I knew what I wanted so I went to my bank and they gave me that, so I didn't bother with the broker. Maybe he could have got me a slightly better deal, but having it at my own bank makes extra payments super easy, so I do that more often and it all evens out in the end.
Just to clear a few things up:
- Those rates you see on ratespy and the other rate websites are generally the ones that come with the highest discharge fees. In addition - believe it or not, the big banks will almost always have higher discharge fees than the "smaller ones" you elude to. Those are often referred to as "monoline lenders", meaning they only offer mortgages.
- Generally best rates are found with monoline lenders
- Brokers generally don't charge fees unless the deal is private, which yours would not be. Each lender pays the broker what's called a "finder's fee", so services should be free.
It's important to be aware of all your options before proceeding. Proceed with the "rock bottom rates" that can be restrictive (not portable/higher discharge fees) or proceed with a rate that's slightly higher (which may only mean an extra $5-15/month for a condo) with no restrictions and standard penalties. Is your mortgage portable?
It seems your situation moving forward is uncertain, so if it were me, I would lean towards a mortgage that has a good rate, but is also flexible. Flexibility in real estate is crucial, and you should always plan for the what-ifs.
The Following User Says Thank You to MillerTime GFG For This Useful Post:
I used ratehub a couple months ago. Went with Canwise financial, and the experience was identical to working with a broker on previous deals. I got their rock bottom rate with 20%/20%, no fees, lawyer was covered. It was as painless as it gets. I think using a broker is fine, as long as they can get you a rate similar to what you see on ratespy/hub.
I used ratehub a couple months ago. Went with Canwise financial, and the experience was identical to working with a broker on previous deals. I got their rock bottom rate with 20%/20%, no fees, lawyer was covered. It was as painless as it gets. I think using a broker is fine, as long as they can get you a rate similar to what you see on ratespy/hub.
The people/institutions you see on those sites are mortgage brokers. They just use those sites to advertise their rates. Most brokers can get the same rock bottom rates if that's what you're looking for.
I used to do it myself but last time around used a broker. I found the value of a good mortgage broker wasn't just about getting me the best rate, but helping me understand the other aspects like discharge fees and how some of the big banks try to trap you in mortgages that are very difficult to ever switch away from them. When you consider how big a lot of mortgages are, getting good advice and having someone who can find the product best suited to your needs is probably worthwhile.
MillerTime GFG or Mortgage Made Easy are the mortgage pros on this board. I'm sure either one can help you out.
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I have purchased 4 properties. I didn't use a broker the first go round but have used one ever since. They are great to get the fine details beyond just the rate and term. I use one every time now.
I used ratehub a couple months ago. Went with Canwise financial, and the experience was identical to working with a broker on previous deals. I got their rock bottom rate with 20%/20%, no fees, lawyer was covered. It was as painless as it gets. I think using a broker is fine, as long as they can get you a rate similar to what you see on ratespy/hub.
Who helped you at CanWise if you don't mind me asking?
Brokers do not and should not charge fees unless private deal.
Rate sites are places for brokers to advertise rates... and as mentioned, most potentially come with restricted features and significant penalties.
The new mortgage rules are even more complicated as there are different rates depending on down payment, type of purchase (rental, owner occupied, etc).
Most low advertised rates are for High Ratio purchases only!!! Less than 20% down payment.
A few bucks more per month may save you thousands later...
There is not one rate fits all...
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Tim Lacroix | 403-648-1541
Mortgage. Made Easy Experts
Mortgage Connect www.TimLacroix.com
Brokers do not and should not charge fees unless private deal.
Rate sites are places for brokers to advertise rates... and as mentioned, most potentially come with restricted features and significant penalties.
The new mortgage rules are even more complicated as there are different rates depending on down payment, type of purchase (rental, owner occupied, etc).
Most low advertised rates are for High Ratio purchases only!!! Less than 20% down payment.
A few bucks more per month may save you thousands later...
There is not one rate fits all...
I just did business with Tim (Mortgage Made Easy) and I would vouch that he had my best interests in mind when I dealt with him. I would reccomend him.
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This is something people should watch before going into their bank to discuss a mortgage, or anything else. There's a good chance your bank will lie to you, or you will get a junior person who just doesn't know what's going on.
Even if a broker does not get you the best rate, having a professional actually looking out for you is probably worth an extra few bucks a month.
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Last edited by Deelow; 01-09-2017 at 09:11 PM.
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Mortgage Broker or Shop?
