Working With a Mortgage Broker in Ottawa

mortgage broker ottawa

A mortgage broker in Ottawa assists you with the financing process by helping you apply for a mortgage with a bank or lender.  They also assist you with finding the best mortgage rates and options for your needs. Once you have decided that you would like to buy a home, getting pre approved for a mortgage is the next best step. One way to do this is with a mortgage broker in Ottawa. A mortgage broker works for you, and is there to assist you throughout the whole financing process, from an application to your closing date.

 

Working With a Mortgage Broker in Ottawa

 

What is a Mortgage Broker?

A mortgage broker is your coach, teacher and bodyguard throughout the process and can help save you a lot of time as they much of the work for you. For example, by doing the rate negotiation for you they help make the mortgage shopping process less stressful and faster. A mortgage broker in Ottawa can also unbiasedly review the pros and cons of each bank and lender. Therefore, you will know the fine print upfront, like if the mortgage is a collateral mortgage. 

Learn more: Collateral Mortgage

Mortgage brokers are regulated and licensed. They help you with the different steps like confirming your employment and down payment. Also they can save you time when wanting to explore options with multiple lenders. 

From your review of the different banks and lenders, once you have discovered the best one for you, a mortgage broker in Ottawa can send your application to the lender for a pre approval review. They also work with your real estate agent and real estate lawyer to assure you have a smooth process. 

 

What is The Different Between a Mortgage Broker and a Bank?

A mortgage broker has access to dozens of banks and lenders. For example, TD Canada Trust, Scotiabank, Alterna Savings and more. They are there to shop around these lenders to find you the best mortgage rates. Also mortgage brokers have access to unadvertised specials and offers that are exclusive to mortgage brokers so you may find more savings with a broker. 

A bank will only be able to show you one option and it will be hard to know if you are being offered the best rate. This is because there will be less lenders to compare their rate with. Also, it will be hard to know if the bank’s mortgage is the best one for you. This is because the bank will most likely not tell you about their downsides when applying.  Just like a hotel with a terrible pool or beds may not tell you about that when you are booking a room for fear you will not stay with them. 

A mortgage broker can review dozens of lenders options and terms with you so there are no surprises.  

Learn more: Using a mortgage broker

 

How Does a Broker Get Paid?

Mortgage brokers are usually paid by the lender. Most lenders pay the same amount and a broker’s goal is to get you the right lender for you. Think of the lender paying a broker, the same as the seller of the home you buy, paying your real estate agent. When buying a home, usually your real estate agent and mortgage broker are there to help and at no cost. Amazing!

With alternative lending, private lending and other non-traditional lending, there may be a fee charged by the lender themselves and/or the mortgage broker. This fee is disclosed upfront and you need to sign that you understand and accept the fee that is being changed before your closing. That way you can be sure there there are no hidden fees. 

Learn more: Private Mortgage

 

How Do I Pick a Mortgage Broker?

Typically asking family, colleagues of friends for a referral is the best place to start. They may have already used a mortgage broker and will be happy to pass on their information. It’s good to know if they have personally used the broker before and are not just referring you a friend or family member that is in the business. You will want to know if they have been working in the industry for a while and if they are good with service and communication.

Another place is to talk to your real estate agent. They will most likely have a few mortgage professionals that they can recommend that they have worked with over the years. From there, you can contact the different mortgage brokers and see which one you connect with the most. 

Online is another great place to find a mortgage broker. Look to the Better Business Bureau for accredited mortgage brokers and to Google for well-reviewed ones.  If a mortgage broker has over 100 reviews, for example, most likely you will have a good experience with them too. 

Learn more: Better Business Bureau

 

Should I Use a Mortgage Broker?

A mortgage broker is there to save you time and energy by working with the different lenders for you. They will help uncover what are the best mortgage rates with the particular lenders. Once a lender is chosen, they will help you with all the paperwork you need to apply. 

Usually a mortgage broker works outside of bank hours, so they may be more accessible and they can do a lot of the process over the phone or online. Therefore, if you are too busy for multiple face to face meetings this will help.  

Interviewing a mortgage broker first, even with just a quick phone call, will help you know if they are the right option for you. The Bank of Canada confirmed in a study that those who use a mortgage broker save more on average then those who stay with their bank.  Even a 0.1% or 0.2% difference in rate can mean $1000s of dollars more in your pocket in interest savings. 

Learn more: Interest Rates For Mortgages

To ensure you get the best mortgage rates and options for your needs, here are the top five questions to ask your Ottawa mortgage broker.

 

Top 5 Questions To Ask an Ottawa Mortgage Broker

 

Is the Mortgage Collateral or Conventional?

This is important to know especially for those who would like more flexibility in the future. Also, for those who want to be able to easily shop around other banks and lenders at renewal for a more competitive rate.  A collateral mortgage is a non-transferable mortgage.  This means moving lenders at renewal for a better rate can come with large costs and extra steps. Some banks only offer clients collateral mortgages. TD Canada Trust is one of these lenders for example. Contact me to find out what banks have collateral mortgages and which ones do not.

Learn more: Collateral mortgages

 

What is the Lowest Rate?

With dozens of banks and lenders to choose from you can shop rates at many different types of lenders however like many purchases you’ll make, you can get what you pay for. Some low rate lenders have heavy restrictions and increased penalties on their mortgages, such as a penalty of 3% of your mortgage balance. An Ottawa mortgage broker can walk you through the pros and cons of different lenders to assure you get the best options for your needs and the best rates on the mortgage with your desired options.

Learn more: Compare today’s best mortgage rates

 

Can I Port and Increase My Mortgage?

If you feel you may move to a bigger home within the term of your mortgage, such as a five year fixed term, then having the option to port and increase the mortgage is important.  Some mortgages are non-portable and others are portable but cannot be increased.

Learn more: Porting a mortgage
Learn more: 5 year fixed rate mortgage

 

What Prepayment Privileges Come With My Mortgage?

Some lenders have restrictions on prepayment privileges and others just offer less options in general.  Some major banks offer clients the ability to pay off an extra 10% of their mortgage a year and others offer 20% or more.

Learn more: Prepayment, Porting and Assumable

 

What Are the Penalties To Pay Out My Mortgage?

The industry standard penalty to pay out a fixed rate mortgage is the greater of 3 months interest or the interest rate differential.  Unfortunately, many lenders including major banks, will use a posted rate when determining your penalty and not discounted rates.  This can create a very large penalty. If looking for more flexibility, ask about mortgage options with more client-focused penalty calculations.

Learn more: What is an Interest rate differential (IRD) and How is it Calculated
Learn more: The Most Common Reasons People Break a Mortgage

 

About Ottawa

Ottawa is Canada’s capital. It is located in Ontario. The city runs along the Ottawa River. Ottawa has the famous Rideau Canal which is popular for staking on in the winter. The population of metropolitan Ottawa is approximately 1.4 million. Ottawa was orginally called Bytown. You can get to Ottawa by plane, train or automobile. There is an international airport.