How does a mortgage broker work?


Congratulations on taking the big step toward homeownership! There’s nothing quite like the feeling of finding your dream home and imagining all the memories you’ll create within those walls. However, the process of actually obtaining a mortgage can be daunting, especially when faced with countless lenders, varying interest rates, and complex terms and conditions. It can be a lot to take in, knowing this is likely the largest and most expensive purchase you’ll make in your life. That’s where a mortgage broker comes in — a knowledgeable and experienced professional who can guide you through the entire process and help you find the best deal tailored to your specific needs.

So, if you’re feeling a little lost in the world of mortgages, don’t worry — I’m here to help you demystify the role of a mortgage broker and explain how we work to make your home-buying journey as smooth and stress-free as possible.

Key Takeaways

  • A mortgage broker can find you the best mortgage options from various lenders.
  • You don’t need to pay a mortgage broker for their services — they get paid through the lender.
  • Having more options to choose from means that you can access better deals than if you stayed with one lender, like your bank.

Table of Contents

What is a Mortgage Broker?

Simply put, a mortgage broker is a licensed professional who acts as an intermediary between you and potential lenders. We have extensive knowledge of the mortgage market and can help you find the right lender and product that best fits your financial situation and long-term goals.

We can ultimately shop around on your behalf, compare different rates, fees, and terms, and help you find the most competitive deal. Our connections with various lenders give us the upper hand — we know which ones are most likely to approve you based on their history and your unique situation. But our job doesn’t stop at finding you the right options. We can also:

  • Help you navigate the world of homeownership and make sense of your finances so you can get a mortgage that fits your budget.
  • Assist with the pre-approval process.
  • Guide you through the application process and ensure you gather all necessary documentation.

How Can a Mortgage Broker Get Me a Lower Rate than My Bank?

You can think of this as: How can Amazon sell you the same product for a lower price than a store? Removing the staff, building, advertising, and other overhead means fewer costs for the company. By using a mortgage broker, these savings come with a lower rate for you as the borrower.

A bank works with a 120-day rate hold, whereas mortgage brokers can operate with 30, 45, 60, 90 and 120-day rate holds. Usually, the less time a rate needs to the held, the lower the rate can be. Think of this as last-minute seat sales for a flight for a trip versus booking months in advance. As time progresses closer to your closing date, more savings may be possible.

Possible Savings After Signing

Also, even after you are approved and have signed a mortgage commitment, I can still shop around for your mortgage rate up to 10 business days before your closing date. While you may have moved on to other tasks, like preparing for the move and shopping for furniture, I am there in the background, working to save you more. Plus, in a decreasing rate environment, it’s important to keep watching for more rate decreases.

More Mortgage Options than a Bank

Lastly, there are more options with a mortgage broker than just your bank. More options mean the possibility of finding a lower rate. When your bank has looked at one option, being their own, I have explored dozens of lenders, including your bank. Think of third-party travel services but for mortgages — tons of selection, discounted prices, a free service and more convenience to you. Without these websites, you would need to contact hotel after hotel to find out their price and hear their own opinion on if they are the best hotel for you. This is just like asking a bank if their rates or mortgage options are the best for you.

Learn more: Best Mortgage Rates Ottawa Ontario

Can a Bank Get Me the Best Rate?

Banks work in a reactive mode. They will offer a rate and only lower it if you show them a more competitive rate you have found. This is an excellent profit-building strategy for banks, and it assists them in making billions of dollars of annual profits. Sadly, these profits come out of your pocket in rates and fees.

You may hear from your bank, “Here is your rate. It’s the best offer we have at this time. However, if you find something lower, come back, and we can match it.” This translates to, “Here is a rate that helps the bank shareholders and my bonus. We have lower rates, but I will only show you them if you first find out what the lower rates are for yourself.” This is not very proactive or client-focused.

Because of this strategy used by the bank, you end up wasting more time: You need to find out their rates first, then talk to a broker to find the lower rates and go back to your bank to have them match. This can get tiring at each renewal.

An Ottawa mortgage broker can significantly cut this time down because we work for you and not the bank and its shareholders. When you work with me, my top goal is to leave more money in your pocket without sacrificing the right type of mortgage. 

Learn more: Mortgage Renewal

What Contract Do I Have to Sign With a Mortgage Broker?

It's important to understand that you don't sign a contract when you work with a mortgage broker like me. I act as a middle-person between you and potential lenders. This means that I will present you with a range of mortgage options from various lenders, but you are under no obligation to choose any of them.

Think of a mortgage broker like a grocery store clerk — they help you find the best product off the shelf, but ultimately, the decision to buy is up to you.

That said, once you have decided on a mortgage option and lender, you will need to sign a contract with them. This contract is known as the mortgage commitment and outlines the terms and conditions of the loan, including the interest rate, repayment schedule, and any other fees or charges.

Do I Pay a Fee to a Mortgage Broker?

As with the previous example with the clerk, you also do not have to pay them to hand you the product. For a mortgage broker, you do not have to pay me to bring you a mortgage option for your consideration. My services are free to you. I get paid by the lender.

Do I Have to Take a Mortgage With a Mortgage Broker Once I Have Started the Process With Them?

Since there’s no contract and no fee, you do not have to use my services if you find another solution elsewhere, even if you’ve started the process with me.

What if the Lender I Choose Goes Bankrupt?

This would be very rare in Canada. Mortgage lending and mortgage lenders in Canada are highly regulated. It would be more likely that a larger lender would buy the smaller lender. This could be seen when Scotiabank bought ING and changed it to Tangerine. The clients, however, during this time were not left stranded. They were able to live out their mortgage contract and then renew with Tangerine, Scotiabank or any other lender of their choice. Many of the smaller lenders are associated with larger lenders and banks for extra security.

What if Your Broker Leaves the Industry During Your Mortgage Term?

I have been in the industry for over 15 years and look forward to many more to come. However, if things change, don’t worry. The mortgage is not tied to me in any way. Once you sign your commitment, you are the lender’s client. At renewal, you can renew with them, your own bank, another lender, call another mortgage broker to assist and so on. 

Is it Best to Just Stay With My Own Bank?

Banks are businesses that sell products and services to make profits. To have the most options and savings, sometimes you need more than one company — not every lender will offer the same deals at the same time. 

Pros of Staying with Your Bank

As a mortgage broker, I can compare your bank’s options, their unadvertised rates, and exclusive offers so you can stay there if you prefer but enjoy a better rate. You may find more convenience in keeping all your finances, like credit cards, personal loans, and day-to-day banking, all in one place.

Cons of Staying with Your Bank

However, it may cost you more if you don’t explore other options. You may miss out on savings and better deals and terms. I can be your one-stop shop to help you find the best rate for your needs at any given time.

Connect with Me Today!

If you want to learn more about how a mortgage broker works or are ready to explore all the best deals out there, reach out to me anytime!

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About Andrew Thake

Andrew Thake is a seasoned mortgage broker with over 15 years of industry experience. He’s assisted more than 2,200 clients in finding their ideal mortgage solutions. Recognized for his excellence, Andrew has received high honours and awards, including the National Rookie of the Year from TD Canada Trust and recognition as a Top 10 Ottawa Mortgage Broker in 2023. He has also been inducted into the Hall of Fame at Dominion Lending Centres and has consistently received their Platinum Award during his tenure as a mortgage broker.

Andrew’s dedication lies in serving his clients and prioritizing their needs with an empathetic approach. Throughout the application process, he provides tailored, informed, and efficient services to ensure the best mortgage solutions for his client’s unique circumstances. The best part of Andrew’s job is when he gets to see the joy on his clients’ faces following their mortgage approval.

Why not make your mortgage experience a comfortable one?

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