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There are many mortgage brokers in Ottawa to choose from. Finding the right one for you may seem like an overwhelming task. Also, if you are used to dealing directly with your bank, adding another person to the process may seem like an unnecessary step.
This article is here to assist with understanding what Ottawa mortgage brokers do and how they can help you. It is designed to alleviate the stress that may be involved if considering to work with one. The information in this article can benefit anyone however focuses on first time home buyers.
After reading this, you will have a better understanding of what mortgage brokers do and don’t do. Also, how mortgage brokers compare versus banks.
Mortgage Brokers in Ottawa
What Are Mortgage Brokers?
Traditionally one would visit their bank to learn about a mortgage. However with the increased popularity of working with a mortgage broker, getting a mortgage from the bank is becoming less popular.
A mortgage broker is now a more familiar representative between you, the borrower, and the bank or lender.
- The borrower is a person like yourself who is looking to borrow money for real estate
- The bank or lender is a typically a traditional lender such as Scotiabank, TD Canada Trust, Alterna Savings and more.
A mortgage broker is a licensed specialist whose goal is to find you the best mortgage rates in Ottawa. Also, to find you a mortgage product that fits your current financial situation and future goals. They have to complete routine education and courses. As well as pass an initial course and test to be able to provide mortgages. This is unlike a bank representative who does not need to be licensed or complete routine courses to advise on mortgages.
What Are The Benefits of Using Mortgage Brokers in Ottawa?
How can a mortgage broker help? This question comes up often for those who are new to using a mortgage broker.
Here are some of the benefits of using a mortgage broker.
They help you avoid common mistakes
When exploring different mortgage options it’s easy to be caught up in finding the lowest rate. There are so many different numbers, terms and percentages being tossed around. Sometimes a mortgage that looks quite competitive can come with various fees or conditions. These may end up costing you more. A broker can help go through the different pros and cons of different lenders and the fine print with you. This way you have a clear picture of the costs that may come with each mortgage upfront.
Mortgage brokers in Ottawa can narrow down the options
As a mortgage broker deals with many lenders every day and only services mortgages, they know the lenders through and through. They can easily narrow in on which options are the best fit for you. Also, which ones will not suit your needs. A mortgage broker goes through your different goals and your finances. From this, they can narrow down to the one or two lenders that are best for you.
They can help you save money
Fortunately, when dealing with traditional lending, a mortgage broker is free to you. Their goal is to find you the best options for your needs at a very competitive interest rate. The interest rates that the broker can offer are typically lower than what you’ll find at your bank. These savings can mean thousands of dollars more in your pocket at the end of the term. Usually a mortgage broker can find you more competitive rates than what you may find by searching lenders and rates yourself.
They improve your chances of being approved
Mortgage brokers review applications and work with different lenders all day. From this, they have the experience and know-how to assure that your mortgage application is presented properly to the lender. More so, presented to the right lender. Also, by having options at multiple lenders, there are more potential solutions for you. In addition to this, mortgage brokers have access to alternative lenders, private lenders and more.
Learn more: Private mortgage in Ottawa
They have more options
Some mortgage lenders only offer their products through mortgage brokers. To ensure you are comparing the most amount of lenders possible to find you the best options and best mortgage rates in Ottawa and Ontario, a mortgage broker is your best bet.
Learn more: Interest rates for mortgages
Why Should You Use a Broker?
This section focuses on the credentials of a licensed and trained mortgage professional.
They are licensed
To become a mortgage broker in Ontario you need to take a course, pass an exam and have a license. There are also ongoing courses that a mortgage broker needs to complete.
They are true experts in their field
A good broker has a knowledge of not only mortgages and lenders, but the real estate market as a whole.
In order to find the best solution for your needs and assure that you are getting great advice, a mortgage broker needs to stay up-to-date with industry updates. Also, mortgage rules and what is happening around Ottawa, Ontario and the rest of Canada. Furthermore, mortgage brokers will be networking with lawyers, home inspectors, real estate agents and more. This helps broaden their knowledge, guidance and advice.
A honest opinion
Mortgage brokers are highly regulated in Ontario. The idea of hidden fees from a mortgage broker or lender would be hard to fathom. The mortgage broker must provide you with a document that outlines the details of the mortgage and any cost associated with their service. Also any costs with the transaction is a whole from an appraisal fee, closings costs, mortgage insurer premium and so on.
You have to agree in writing to any fees charged by the lender or mortgage broker prior to closing.
Learn more: What are all theses insurances?
What Do Mortgage Brokers Do?
In summary, a broker can guide you towards the best mortgage for your needs. They take a lot of the work out of the process for you. You can learn more here about how they do this.
Mortgage brokers can assist with:
- Finding the best mortgage rates based on your finances
- Helping you understand how much you can borrow
- Finding the mortgage payment that works best with your budget
- Advising you on different options that may suit your needs such as the purchase plus improvement
- Negotiating with lenders on your behalf
- Guiding you through the mortgage application process from start to finish
In addition to reviewing with you the different products available, a broker will also look in-depth at your financial situation. They will help you understand the various terms of any mortgage they present. Not only will they look at the maximum you can be approved for, but also the maximum amount that is within your personal budget. The goal is to find a mortgage amount and payment that you are comfortable with. Even though a lender may approve you for more, it is important to make sure that the mortgage payments are sustainable for you.
A broker will work to explore your unique situation, needs and goals. This will help them provide you with a catered solution. Also, to give you detailed advice on the options specifically tailored to you. This review can help take the challenge of finding the right lender away and make it easy.
They will have a thorough conversation with you to set out what you are looking to borrow the mortgage funds for. As well as, how the mortgage will affect you, your budget and personal finances. Although the review may seem overly detailed at times, it is with your best interests in mind.
During the entire process, your broker will be there to help with any questions that arise. Plus, to provide clarity any information you receive. The mortgage process can be complex. Also, a mortgage contract can contain many pages. Having someone review all this with you is a great assistance.
They have a thorough knowledge of the market and real estate trends. Also, a strong relationship with banks and lenders. This helps them align you with a better suited mortgage product or lender that you may not have found yourself.
Also, their relationship with the lenders and access to exclusive discounts and unadvertised specials mean that they may find you a mortgage rate that you may not have been offered otherwise.
With each lender that you are presented, a broker will review with you the terms, options such as prepayment privileges, fees and more that come with the mortgage.
Mortgage brokers in Ottawa can also be giving you tips throughout the process on how to improve your chances of being approved.
A mortgage broker can help you avoid common mistakes that can arise during the mortgage application process. As they have been through this process hundreds of times, they know where common challenges can arise. From this, they can better guide you through the process and assure that your application is presented properly and accurately to the lender.
There’s a lot of paperwork involved with the mortgage application process. From the mortgage contract itself to the supporting documents such as your pay stubs. Mortgage brokers in Ottawa can go over all this with you in-depth to ensure the right documents are provided upfront.
Learn more: Documents you need for a mortgage pre approval
When Should You Start The Process With a Broker?
In short, if you are thinking you need a mortgage, it’s best to reach out to them as soon as possible.
Connecting with an Ottawa mortgage broker early in the process, assists with making your experience stress-free and can align you with savings faster. As a mortgage broker can help you, from the review your pre approval application up to your closing date, they are your one stop shop and can save you time.
They can also help reduce the sadness and disappointment they can come from being declined for a mortgage. This is because, with more options and alternative lending solutions they may be able to find a mortgage option when your bank cannot.
Also, through their training, guidance and experience they can coach you in other areas such as building your finances or credit history.
Learn more: How to build your credit score
A mortgage advisor can help you determine what you can afford. The details that you provide to them will assist in determining your maximum home price. If looking for homes before talking to a mortgage broker, you may be looking at homes over or under your pre approval amount. Looking at homes over your pre approval amount can lead to a frustrating experience as it might set your expectations too high .
It’s quite often that people feel they may qualify for a house bigger than what the current mortgage guidelines will allow.
Learn more: Mortgage pre approval Ottawa
As a very soft rule of thumb, a person can qualify for a home about four to five times their annual income. Of course this can vary depending on the amount of debt and down payment you have.
Not only will a mortgage professional review your price and budget with you however they will also go over the other costs associated with buying a home. These costs are typically known as closing costs. They can include moving costs, land transfer tax, pre-paid property tax and more.
Learn more: Closing costs to consider when buying a house
Speaking to a mortgage broker early in the process is always recommended.
Also the mortgage professional can go through all the paperwork needed so that you can start to collect it upfront. It is much easier to start setting the documents aside early as opposed to having to rush to put them together at the last minute.
If you are already deep into the mortgage process, speaking to a mortgage broker for a second opinion is a great idea. If you currently have a pre approval that you are comfortable with, now is a great opportunity to contact a mortgage broker to see if the rate you have been offered is one of the best mortgage rates in Ottawa and Ontario.
Learn more: Best mortgage rates Ottawa
Some people prefer to do their own research and apply for a mortgage on their own such as with an online mortgage application. I do not recommend this as it is not an in-depth review. Plus, the paperwork has not been checked and it is also not looked at by a mortgage underwriter.
Mortgage Brokers in Ottawa
Mortgage Brokers vs. Banks
A mortgage broker is not the only road you can take to get a mortgage. Some people who are not aware of all the options available will only visit their bank to review mortgage options. Or they will visit a bank to to compare what they have found with a mortgage broker.
Getting a mortgage directly through your bank has some pros and cons.
- You have access to a bank branch that you can visit anytime during your mortgage term
- You may have a relationship with a current bank adviser who knows your finances
- Some major banks only offer their mortgages through their branches and therefore to have that option you need to visit the bank directly
- You will not be able to compare the bank’s rate with other rates
- There is small selection of lenders and products as there is only one lender
- They may cross sell you on other mortgage products such as mortgage protector insurance
- They may cross sell you on other banking products such as bank accounts, credit cards, etc. during your mortgage visit
- You may get a biased opinion on if this product is good or not
A biased opinion
This is similar to if you call 10 restaurants and asked if they have the best food or a hotel and asked if they had the best beds. For some strange reason, they will mostly likely all say yes. A bank will not tell you when they have an unfavourable mortgage product for your needs and that it’s best to try another company.
Also, a bank representative will most likely be penalized or let go, if they are caught recommending you go to another bank or lender if they are aware of a better deal there. If a bank staff member tells you to switch your business to another bank as the other bank has lower rates, the staff member would most likely will be disciplined. With that, we can see instantly that the bank staff member may not be working with in your best interest in mind.
In many bank roles, the staff member’s bonuses and income align with the pricing they offer on products. The more discounts they give, the less they make.
The shareholder comes first
A bank’s clients are the shareholders. You are the customer that is there to create value for the bank’s clients, the shareholders. The bank’s main responsibility is to service their clients. With this, to create as much profit as possible for their clients. If you own stock in the bank, you as well would want them to be charging higher interest rates and offering more products to customers so that the stock can go up. Then you make more money as a shareholder.
Unfortunately it is the customer who walks through the door that is the one who helps create these profits. A great question to ask yourself is, when was the last time your bank called you to lower your fees and rates as a courtesy?
Banks come with a quite a bit of overhead such as electricity, staff wages, the building and more. Just like buying a product at a store may come with a higher price than buying the product online such as through Amazon. Getting your bank mortgage through a bank branch may come at a higher rate than getting the same bank mortgage through a mortgage broker. Mortgage brokers do have access to banks as well. They have access to TD Canada Trust, Scotiabank and more. Typically the rate you will see from a bank through a mortgage broker will be lower than the rate you will be receive from your bank.
A longer process
To complete a mortgage with your bank branch, you will need to visit the branch three to four times throughout the mortgage process. Typically for an hour each time. This can be quite a long process. Usually clients will need to meet with the bank at the pre approval stage. Also, once they’ve made an offer, and to either bring the documents in or sign the mortgage package once approved. Some banks are only open during business hours with reduced hours on weekends and this means that you are taking time away from work in order to obtain a mortgage or time out of your evenings and weekends.
Mortgage brokers can work around the clock on your time and at your location. If you want a big bank mortgage are not happy with the bank’s hours of operation, getting the bank mortgage through a mortgage broker can help extend the hours.
How Do I Find The Best Mortgage Brokers in Ottawa?
If you’ve decided to try an Ottawa mortgage broker, here are some great steps to find the best one.
Find a mortgage broker with a great reputation. You can search online to see reviews and also visit websites like the Better Business Bureau.
Learn more: Better Business Bureau
Also, you can look to a mortgage broker’s testimonial or reviews page. If you see lots of great five star reviews, that is a good sign.
Friends and family
Ask friends and family if they have used a mortgage broker before. You can see if they did or did not like the experience.
Product and lender selection
Look at the number of products they offer. Sometimes a mortgage broker with a larger brokerage has access to more selection. Mortgage brokers have dozens and dozens of lenders to choose from. However, if the mortgage broker is part of a local brokerage, just like a local grocery store, they may not have the massive selection that a national brokerage does. Also the mortgage rates with lenders from a national brokerage may be lower. This when compared to a local mortgage brokerage. Fortunately, I work for one of Canada‘s largest mortgage brokerages. This gives you many amazing rates and products to choose from.
Also, look to see if the mortgage broker has access to other products such as rental properties and cottage mortgages. That way they can service you with all your needs now and in the future.
Learn more: Cottage mortgage in Ontario
Plus, other products such as rental properties, bad credit mortgages, private lenders and more.
If your finances are not where they should be to buy a home due to something like bad credit, a mortgage broker that has options with traditional banks and lenders, alternative lenders and private lenders can help.
See if they charge a fee for their service. Mortgage brokers typically do not charge a fee for their service when working with traditional lending. However, sometimes with alternative lending or private lending there may be a fee by either the broker or the lender.
Look at their experience. Working with a mortgage broker that has at least 10 years experience in the industry is a good idea. It can take many years to specialize in one lender’s products alone, let alone dozens of lenders. Plus the time it takes to actually being able to work through different situations that come up with clients over the years. For example, previous bankruptcy, self-employment, multiple rentals owned and more. The more exposure a mortgage broker has to these scenarios, the more likely they will have an option top of mine that can assist.
Follow your gut
Go with your personal feeling. By talking to mortgage brokers you will quickly find which one best suits your personality and needs. It’s great to follow your gut.