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A mortgage broker acts as a protective layer between you and the lender to ensure that you were getting the best deal possible with no surprises. Learn more here about Ottawa mortgage brokers.
Ottawa Mortgage Brokers
How do Ottawa Mortgage Brokers Get Compensated?
Ottawa mortgage brokers are paid a commission from the lender who’s mortgage you proceed with. The commission can vary slightly from lender to lender. It is typically a percentage of the mortgage amount. It is important to note that most lenders pay approximately the same amount of commission. This removes the incentive for mortgage brokers to send a majority of their mortgages to one lender over another.
There are two main ways that a mortgage broker will receive commission:
This is a commission that is paid to the mortgage broker on an ongoing basis. The mortgage broker may receive commission monthly, annually or with each renewal. Typically with a trailer commission there is also a lump sum that is paid on the advance of the initial mortgage.
This is a one time commission that a mortgage broker receives on the closing of the mortgage. This amount is usually a percentage of the mortgage itself.
There may be times where mortgage brokers charge a fee for their service. Typically with traditional lending there is no fee for a mortgage broker’s services. However, with alternative or private lenders the lender and/or mortgage broker may charge a fee. This fee can vary depending on the type of mortgage. A mortgage broker should always inform you of any possible fees upfront. Also, you will have to sign and agree to the fee prior to closing. This assures that no hidden fees can be added during the process.
What is a Mortgage Broker?
Ottawa mortgage brokers are there to assist you with home financing. A mortgage broker can assist with purchases, renewals and refinances for example. As a mortgage broker typically works for you for free. This is similar to a realtor who is helping you buy a home as the seller pays them. This is a great way to have an expert by your side at all times at no cost to you.
An Ottawa mortgage broker has access to a variety of different types of lenders. For example, banks and credit unions and monoline lenders. Ottawa mortgage brokers also have access to options to a bank may not be able to assist you with such as private lenders.￼
Is There a Downside to Using Ottawa Mortgage Brokers?
Ottawa mortgage brokers are there to provide you with unbiassed opinions from a variety of different lenders for financing. A mortgage broker however may not be for everyone. For example Ottawa mortgage brokers do not have access to every bank. There are many banks that offer their mortgages through a mortgage broker. Typically these are offered with unadvertised and exclusive rate discounts.
However, not every bank has a mortgage solution available with the mortgage broker. Therefore if you wanted a mortgage with a bank that a broker does not work with, this would not be possible. However the mortgage broker will be able to still shop around those bank’s rates to compare with the banks that they do have. That way you still get a complete review.
Mortgage brokers have access to a variety of lenders. If you want to have all your eggs in one basket and only work with one financial institution, the brokers options with other financial situations may provide you with too much selection for your comfort level. However, if the mortgage broker has access to your particular financial situation you can still keep all your eggs with one basket. As well as possibly achieving a lower rate than you may have been offered direct from your bank.
A mortgage broker is working between you and the lender. If you prefer to have direct access or communication with the lender than a mortgage broker may not be for you. This is because they work as a middle person between you and the lender.
How Do I Find the Best Mortgage Brokers in Ottawa?
You are able to research mortgage brokers online and with that can see their reviews and visit their websites. From these reviews you will be able to locate top rated mortgage brokers in Ottawa.
Ask friends family and colleagues for a recommendation
The odds are good that someone in your life has used a mortgage broker before. With that, they may be able to recommend one that they had a favourable experience with.
Better Business Bureau
There are mortgage brokers that are recognized and accredited on the Better Business Bureau. If you are not sure where to start this may be a great place to find a reputable mortgage broker.
Learn more: Better Business Bureau
Interview mortgage brokers
Each mortgage broker will have their individual personality. It’s important to make sure that their personality fits with yours. Also, mortgages can be quite complex and it’s important to have an Ottawa mortgage broker with experience. I always recommend choosing a mortgage broker who has at least 10 years experience in the industry.
It’s important to interview a mortgage broker before choosing to proceed with them. Some brokers work for smaller, local mortgage companies. These brokers may not have access to the same lenders and discounts as mortgage brokers who works for a large national company. This can also affect the discounts and turnaround time that the mortgage broker has access to.
Important Questions to Ask Ottawa Mortgage Brokers
Are you recognize or accredited by the Better Business Bureau?
If they are on the Better Business Bureau you can quickly see what their rating is. Also, if they have any reviews, as well as past disputes with clients.
How many lenders do you have access to?
This is important to know as the more lenders a mortgage broker has access to, the more options and better rate discounts they can offer.
Do you charge a fee?
This is a great question to ask upfront to know what sort of costs you may be getting into in working with a particular mortgage broker.
How many years have you been in the industry?
As I mentioned earlier, I always recommend using a mortgage barker with at least 10 years experience in the industry. Mortgages are very complex. They require a lot of communication with a client and a lot of experience with each lender. Also, there is a large amount documents. When dealing with tight timelines and one of the largest purchases you may ever make, experience is a must.
What is there school or employment background?
If a mortgage broker has a background in business school this can be an asset. If the mortgage broker has recently switched from an unrelated industry or has no educational background in business, this may hinder the experience or advice they bring to the table.
Do you have any reviews or testimonials?
A good mortgage broker will be able to provide you with reviews and testimonials from previous clients.
Important Questions to Ask About the Mortgage
Is the rate you are offering exclusive to mortgage brokers or can I access it myself?
Ottawa mortgage brokers typically have access to unadvertised specials and exclusive discounts. If the rate they are offering you is a current, advertised bank rate for example the mortgage broker may not be providing you with the lowest rate possible rates or have access to the discounts that other mortgage brokers have.
Also if the mortgage broker is charging a fee for a rate that you can achieve yourself, it would not be necessary to pay this fee to get the rate with them.
What is the interest rate?
This is perhaps the most popular question as it directly affects your bottom line. It’s important to make sure that you are getting a great rate on your mortgage. However, you do not want to lose sight of important options that may be useful in the future. For example portability, pre-payment privileges and so on.
What made you choose this lender over other lenders?
The mortgage broker should be able to tell you the reason behind them choosing a particularly lender. Also, why they chose the lender or over other similar lenders. Typically the answer will be a combination of the rate and the options that come with the mortgage.
Can I pay my mortgage off faster?
If you would like to pay your mortgage off faster than the original amortization then it is important to make sure the mortgage they offer has this option. This is typically called pre payment of your mortgage. Most traditional banks allow an extra 10 to 15% of the mortgage to be paid off extra per year without a penalty. Monoline lenders typically allow you to pay an extra 20% of your mortgage off per year without a penalty.
Does the lender have any additional fees?
Typically traditional lenders do not charge fees. However when looking to alternative or private lender, the lender may have a fee. With these types of lenders it’s important to know the fee upfront as it is usually payable on closing and out of your pocket.
What documents does this lender require?
The mortgage process requires quite a few documents. To know early in the process what documents the lender needs can help save time in the end. This will give you more time to collect the various documents and have them reviewed.
How long does the process typically take to get an approval?
The application itself does not take very long. It can take approximately 10 to 20 minutes to do a mortgage application. From there, they send the application to a lender and usually the review is anywhere from same day up to two business days.