5 things your mortgage broker isn’t telling you

Most brokers only negotiate with a few lenders on your behalf.

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From the February/March 2014 issue of the magazine.

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1. Commission is my friend. As a borrower, you don’t typically compensate your broker. It’s lenders who shell out commissions and finders fees. A conflict of interest? Could be, especially if one lender pays more than another and that monetary temptation results in a worse deal for you, says John Andrew, a professor of real estate at Queen’s University. “If there’s even a 0.1% difference in the interest rate you get, that can have huge implications for the total cost of your mortgage.”

2. Um, I don’t actually negotiate with 40 lenders. Despite what some brokers claim, it’s usually more like three or four, says Rob McLister of CanadianMortgageTrends.com. And for good reason: there are learning curves, volume minimums, and some lenders simply don’t pay as much in commission. In fact, a number of the big banks use their own salespeople and closed down broker channels years ago. “So if they’re not going to get paid, the average broker is going to think, ‘Why spend the time on them?’”

3. I’m a newbie. In the brokerage business, experience matters. Although anybody can track and negotiate interest rates, it takes a seasoned pro to handle trickier situations like shaky credit history or self-employment, and to know which mortgages have deal-breaking loopholes.

4. The fine print matters. Most borrowers focus on getting the best rate but brokers know it pays to delve deep into a mortgage’s terms and conditions, says Andrew. Can you increase or decrease monthly payments, or throw lump sums at the principal? How costly would it be to break the mortgage? These concerns are just as critical as rates.

5. I’m not a miracle worker. There’s only so much a mortgage broker can do for you if you walk in with a credit score of 600 and a trail of unpaid bills. Lenders see you as a high-risk proposition and no broker will convince them to give you a rock-bottom mortgage rate reserved for triple-A clients. Be realistic.

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13 comments on “5 things your mortgage broker isn’t telling you

  1. Pingback: Weekend Reading: A Two-Book Giveaway Edition - Financial Freedom

  2. I have always been fond of your magazine since it’s inception because it has always been very informative and useful for the majority of the population that doesn’t work in the financial industry and dosen’t have extensive knowledge on financial matters. But, I totally disagree with this article and the message that is communicated here. Being a mortgage broker for the past 15 years, my opinions here may be viewed as bias, but here they are anyway. First, this article may drive a consumer to choose to go to a major bank branch to get their mortgage and we all know how that ends up. An article titled “Five things your personal banker at your major bank branch won’t tell you” should be published to give your readers a fair playing field and you should include IRD penalties, more specifically how the big 5 banks calculate them compared to monoline mortgage lenders that work with mortgage brokers.

    It would also be more responsible on your part to explain numerically the “huge implications” that a 0.1% difference in your mortgage rate would create using an average mortgage amount and a typical 5 year term. Maybe you should have consulted a professor in mathematics instead of real estate, because my calculations certainly don’t agree with this statement …. and I have a math degree !!

    Your mandate is to educate your readers and I think this article did the opposite.


  3. As a mortgage broker for over 10 years, I am very disappointed with the negative spin that has been put on mortgage brokers in this article. The headline is very negative and not accurate, and the headings on each point are also misleading. I fail to understand why this “freelance journalist” would write this in such a way as to purposely put mortgage brokers in such a negative light. Much of what she states in this article could be directly aimed at banks and their mortgage specialists. Mortgage specialists at banks are paid commission, and their commissions vary with which of their banks mortgage products are offered.

    Most mortgage brokers that I know are good people and enjoy helping others. It is a career that can be extremely rewarding and not just monetarily. In the years that I have been a broker, I have helped people get homes that came to me as a “last resort” when I should have been the first resort. I have helped people save their homes even in the middle of being foreclosed on.

    This journalist demonizes commission because some lenders pay more than others. Most brokers will put their clients with the best lender and product that suits them personally. If two lenders offer the same product but one pays more… Of course we’re going to send their app to the one that pays more. And as far as being paid commission, it would only make sense that the person being paid commission is going to work much harder for their client. If the mortgage does not go through the broker makes nothing. If the client isn’t happy with the service provided, then that means no referrals from them.

    As brokers, we are small business owners. It’s a challenge every day to dispel the myths and untruths that our competition attempts to put in the minds of the general public. I could publicly write a list a mile long about the benefits of using brokers over our competition but I choose not to stoop to that level.

    There is plenty more I would like to say about this, but I’m thinking my point has been made.

    I guess smut still sells, even in publications such as this or the editors would have taken a closer look at this article before allowing it to be published.

    Shame on you.


  4. I am totally disappointed in this article. As a broker, I pride myself on research and knowing the best products and rates for my clients that matches their needs. Maybe this magazine and journalist should have done the same.


  5. This article is very, very far from the truth in so many ways. First of all most staff from the bank are super biased to their own products and do not offer the clients the “BEST” out there, they can only offer what their respective bank has available. Many mortgage specialists from a bank have very little experience on market trends, etc which make them unable to give client the best advise on which terms and products they should look at for their individual situation. Everyone has a different story and every story may need a different lender. I am a mortgage broker and have been for over 10 years and I pride myself in getting the best product for the client regardless of my commission fee received from the lender. I cannot say how many times my clients have ended up paying excessive penalties to lender because they were in the wrong product for the time. I think this writer should be doing an article on “the 20 things your bank is NOT telling you about your mortgage!”


  6. I’ve worked for 37 years in the financial industry- 21 years with the Bank. Since my move 16 years ago to sales roles in the mortgage broker industry, I’ve worked with thousands of mortgage brokers on both the lender and brokerage sides. Mortgage brokers are far more educated on mortgages and their terms, available products, lender guidelines and product and program features. The majority of the brokers have decades of experience to back them up and a majority of them have moved from the banks, knowing they can offer a client so much more as a broker. They are experienced at coaching credit challenged clients and have numerous options for those who are not considered A clients. Your article seems to be not very well researched or perhaps the info came from a banker? I will leave you with a quote. “you can be unspoken and be thought a fool, or open your mouth (or put pen to paper) and remove all doubt.”


  7. Pingback: 5 Things Mortgage Broker Is Telling You (Response To Moneysense magazine) | Novik Mortgage - Canada's Leading Lender Competing for Your Business

  8. I read this article and started to laugh. There are bad apples in every industry and some may fall prey to the items you mentioned above . As a mortgage broker for the last 2 years, A newbie, as you call it in your article I always put my clients interests first and always read the fine print of a mortgage prior to presenting it to the client. The extra couple hundred bucks today is not worth the possible lawsuit and damage to my reputation down the road. Even if I dealt with three or four lenders on a regular basis that would still be more than I would get at the bank. I can guarantee you that the bank does not explain everything to you when you sign with them. Prior to becoming a broker myself I can speak from personal experience to tell you that at no time when I spoke to the bank did they explain about paying it off early, lump sum payments or interest rate differentials. Maybe you next uninformed article should be what a bank should be telling you?


  9. Reading the comment below I think you guys and gals missed the point. 5 things your mortgage broker isn’t telling you

    Ok #1 valid kind of. However I don’t know how the .1% factors into it.
    #2 This is not accurate if the broker is with a large firm or network. We have a 3-4 we prefer but if you are part of a MA, Verico, DLC you normally have at least 15 or more. More importantly it doesn’t matter. The rates across the 25 lenders I have are all within .05 of each other.
    #3 This is true. But the point is saying work with an experienced broker. Still work with a broker.
    #4 Again this says work with a good broker.
    #5 to the costumer ..

    This whole article has a negative title but is not that negative just not accurate


  10. The writer of this article has emphasized on the least important factor of a mortgage ie the mortgage rate. The worst part is the reference of 0.1% mortgage rate difference which seems to have huge implications on the total cost of a mortgage. It clearly shows how much time was put in researching on this matter.
    I always thought Money Sense magazine articles are full of information, facts & factoids which actually make sense but this article has failed to deliver that value to their readers.
    A bit more of unbiased research with precise numbers would have been an eye opener for the writer & readers of this article. I urge Money Sense magazine to publish articles which actually make Sense. I urge Money Sense magazine not to assume their readers to be fools & to be considerate of the readers.

    Simply put…. Not a Good article to be proud of, even if its published in Money Sense magazine. I am sorry.


  11. All good information. It also pays to do a little research yourself.


  12. I am appalled by the inaccuracies of this article and the very negative spin. Who’s your editor? You have influence with your words and you have possibly had a negative impact on your readers. As a “newbie” broker I work 60 hours a week to fight for my clients. Whom I ALWAYS put their best interest above my own!!!! Yes we are 100% commission which means we need to really know our stuff in order to make money or we don’t make money. We also take calls, emails at all hours of the day. There is a mountain of work and negotiating that happens behind the scenes so not to stress our clients out. Did your Mathematician not know this? And yes I am a miracle worker when it comes to mortgages. I save people from bad bank products and advice from people such as yourself daily! There are very few situations we can’t be of help in. You have lost me as a reader and my respect. Shame on you.


  13. I am disappointed to see such a negative article written about mortgage brokers. I have been in the industry for 11 years. Your article is incorrect on a number of items. I won’t put you in a more expensive mortgage unless you need to be there. Many low rate , no frills mortgages have high exit penalties. If you mentioned to me that you may have to break the mortgage, I will put you with another lender with a lower exit penalty. If I don’t put your interests first, I can lose my license. RECA , the Real Estate Council of Alberta, fines anyone who is not working in the best interest of their clients. Secondly while I have over 50 lenders I can use, a good file will go to one of 3 lenders who offer better service or volume discounted rates. If you are self-employed , want to buy a rural property or have blemished credit, I will use other lenders. This is why having 50 lenders is helpful. You took time to speak to a mortgage broker, but you should have had him read over your final copy for errors or bias.


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