One of the major benefits of working with a mortgage professional is that they have access to many lenders, options and rates from traditional banks such as Scotiabank and TD Canada Trust to smaller lenders, trust companies, credit unions and so on.
For clients only familiar with traditional banks, many of the lenders available with a mortgage professional may be new to you. These lenders, although new to you are household, everyday names here.
A smaller lender does not mean you should fear them or that they are not a strong lender. Many of these lenders are quite large with with tens of billions of dollars in assets under administration, hundreds of employees and multiple offices across the country. Some even have branches in larger cities such as Toronto.
Lenders, are like hotels. There are major brands of hotels that you are most likely familiar such as Best Western and Marriott, however sometimes for the most catered experience a boutique hotel is the best option. For example, the The Magnolia Hotel & Spa in Victoria took the number one spot for Travel and Leisure’s best hotels in Canada for 2017 although perhaps many have not heard of this hotel company.
Big banks spend big dollars on branches, staffing and advertisement. Sadly however these big dollars come out of your pocket in the way of fees and higher interest rates. Big banks make big profits on this. I would rather see more of that money in your pocket than in theirs, in terms of interest rate savings for you.
For your everyday banking or your credit card, having a traditional bank may be the way to go with ATM machine access, unlimited withdrawals, travel points, and so on however as a mortgage is more for utility and serviced less frequently, such as every 5 years, having a luxury brand bank, may not be necessary and can be costly. Such as if you just need a simple tee shirt to mow the lawn you may be better off in Hanes then Hugo Boss.
Smaller lenders are governed by the same regulator as banks and follow the same guidelines.
When asked if they are risky, think that you have their money, they don’t have yours. Lenders are the ones taking the risk on you. For example, if you were to lend a stranger $100,000, would you or the stranger be taking the risk. If a smaller lender was ever to be bought or no longer offering mortgages, your mortgage contract, terms, rate, etc will still stay in effect until its maturity This could be seen when Scotiabank bought ING, now called Tangerine, for example.
Each person is unique and having a mortgage with a big bank or smaller lender is a personal preference and both can have pros and cons. I am here to go over all the pros and cons with you and help you make the best, educated decision for your needs.