Like politicians, there are gems and duds
You need to weigh terms, rates, features, conditions, advice and service. Some folks try to DIY this process, but the smart money lets brokers do the legwork. Good brokers are time-savers, deal-finders, and are able to get tough mortgages closed. Even if you plan to renew with your existing lender, second opinions can potentially save you a bundle.
Someone may give you a referral, but how do you know if that referral is capable and motivated to give you the best possible deal, advice and service? Moreover, sometimes people refer you to a particular broker out of self-interest.
You might use one of the mortgage industry’s online directories instead, but they’re mostly useless, given they don’t let you sort by experience, skillsets, etc.
You could alternatively ply Google and check broker reviews (hint: brokers don’t solicit reviews from unhappy customers). You could also do a cursory background check on your provincial regulator’s website and the Better Business Bureau, or you could check message boards or rate comparison websites.
However you find a broker, don’t assume they are all competent. Like politicians, there are gems and duds.
Readers sometimes ask what I’d look for in a broker. Every borrower’s situation is different, but if I were shopping for a prime mortgage today, I’d want these 10 things:
1. A full-time broker who has closed at least $10 million of mortgages in their personal name in the last 12 months (it’s too easy for inexperienced brokers — even supervised inexperienced brokers — to make costly mistakes in this business).
2. At least five years of experience — worst case two — advising customers and closing mortgages (some say it takes up to 10,000 hours to be an expert at anything; mortgages are no exception).
3. A broker who genuinely shops around, sending less than half their business to their top lender and less than two-thirds to their top two lenders, unless they can prove their rate is near-lowest for the loan best suited to you.
4. Someone who can access status rates at most broker lenders, including TD, Scotiabank, BMO, National Bank, Manulife Bank, First National, MCAP, Desjardins and small lenders that often lead in pricing, such as MCAN, Marathon Mortgage, Shinhan Bank, KEB Hana Bank and credit unions. A broker open to buying down the rate with some of their commission doesn’t hurt either.
5. A broker who spends time understanding your five-year plan before recommending a lender and rate. What good is the lowest upfront rate if you’ll pay more overall because of a horrible policy on prepayment penalties, refinancing before maturity, portability or conversion from a variable to a fixed rate?
6. An online portal that makes it easy to apply, lists all necessary documents, lets you upload pictures of documents and shows the near-real-time status of your application.
7. Some educational credentials (a relevant university degree isn’t mandatory as experience is number one, but it raises the probability you’re dealing with someone who has dedication, perseverance and analytical ability.)
8. Someone who answers emails or texts within two to four business hours.
9. Someone who’s honest, doesn’t take “shortcuts” on your application or documentation, doesn’t try to upsell you on features you don’t need, and always tells you when rates drop before your closing.
10. A broker who can get approvals same-day or next business day (although lenders offering the lowest rates can sometimes take a few weeks).
Every rule has exceptions, of course. For example, “A newer broker with lots of time on their hands could be a benefit,” says veteran broker and past president of the Canadian Mortgage Brokers Association – British Columbia, Marci Deane. That’s particularly true if they’re hungry to give you a better deal and they’re students of the mortgage market.
In essence, you want a broker who’s the trifecta of low cost, sage advice, and Usain Bolt-like speed. “And the lowest rate is not the lowest cost,” Tourloukis adds. “The wrong product with the lowest rate will end up costing more than the right product with a slightly higher rate.”
That said, most well-qualified borrowers shouldn’t pay more than 10 bps above the lowest rate for the product they need. “Need” is the keyword, because a great 4.49 per cent default insured rate is irrelevant if your property is a) a non-owner occupied single unit rental, b) more than $1 million, or c) you’re getting a 30-year amortization, all of which may be uninsurable. In any case, if your broker tells you that 10 basis points are insignificant, ask them to quantify how they’ll make up that 10 bps difference, which amounts to roughly $480 of nominal interest on a five-year term.
And find someone who monitors your mortgage after closing, alerting you to money-saving refinance opportunities. “You will never see this from a lender or inexperienced brokers,” says Tourloukis.
The rates displayed below are updated by the end of each day and are sourced from the Canadian Mortgage Rate Survey produced by MortgageLogic.news. Postmedia and Imaginative. Online Inc., parent of MortgageLogic.news, are compensated by certain mortgage providers when you click on their links in the charts.