Banker or Broker – Why choose a Mortgage Broker?

In today’s hot housing marketing I get a lot of people ask me these questions:

  • “Why should I use a mortgage broker over my other financial institution?”
  • “My parents say I should use a traditional financial institution. What can you do for me?” 

Well, the response usually begins with, well did you know I deal with all types of lending institutions but also work with most major banks.  

But let’s face it, back when our parents purchased a home, and their financial institutions were more “local, more relatable, they know me, and I know them!”  I could not agree more that at one time it felt safer and more appropriate to go to someone you knew and trusted when possibly making the largest transaction of your life. Unfortunately, today is not the same as it was, thirty, twenty or even ten years ago.  Yes, you can go to your financial institution, like your parents recommended, make an appointment with a mortgage specialist, but then what?  Then they will take all your information and send it off to another person, who you or your parents do not know, who will most likely send it off to another person you do not know.  Then if you have any questions while all these emails are taking place, well I recommend that you, take a number and wait to be called back when it is convenient for them, because they work for the financial institution not you.  However, when you work with a Mortgage Broker, we work with you and we work with all types of lenders to get you the best mortgage possible to meet your needs.

Canadians have been using mortgage brokers more and more over the years.  That is because clients get to know their mortgage broker and their mortgage broker gets to know them and their needs.  Mortgage Brokers have access to all the different products from many different lenders, but one of the main reasons is that you are able to build a relationship with one person, who is always working for you, which is key because you  want them to understand your needs and guide you through the process from the time you first start thinking of a mortgage, to answering the many questions you will most likely have in the process, to most likely being the first person to congratulate you on becoming a homeowner!

Over 35 percent of Canadians use mortgage brokers now compared to 28 percent in 2018, according to CMHC and these numbers are only going to continue to rise as more and more people enter the market for their first or forever home.  Regardless of the market you are in, no two mortgages are the same; this is not a simple cookie-cutters process, nor should it be treated that way. 

Mortgages are hard to get; it is not like buying a car or applying for a credit card.  They require a much deeper dive into your financial health with many “whys” being asked about your financial decisions; after all, you have asked for hundreds of thousands of dollars, you would also want to know the whole story before lending your money, wouldn’t you?  However, in saying that they’re options for the less-than-ideal applicants that are available to you without judgement or bias and your mortgage broker will help you navigate through all available options.

The Market in Nova Scotia is all over the place from property availability, asking vs selling price and interest rates being offered, all of it is unknown what the future will hold for any of these things. Mortgage Brokers can try their best to offer solid advice and guidance, but the choice is yours and yours alone.  Some financial institutions and brokers believe a variable rate is the best or the worst thing you can do, and yes, we all have an opinion on the best option, but as a mortgage broker it is my job to show you what is best for you and your goals for repayment. How much you can afford is also different from how you want to live, and I encourage every client I have to think about that long and hard when choosing the path you want to take. Just because you can afford more on my computer does not mean you can live by those means or afford the same lifestyle, taking those trips south and purchasing those other out-of-the-norm things as freely as you did before. In saying that, sometimes, people like to have a big family home and not take trips, others want a more modest home and still travel, and some can do both; the choice is yours and it is my job to try and make that happen.

In today’s market, there are so many things that are swirling around in the minds of wannabe homeowners and homeowners alike.  First-time homebuyers are questioning whether they can afford to get into the market or if they can afford to wait.  Homeowners who want to upgrade or downgrade are wondering if this is the right time to do it, and some are just wanting to refinance a current home to consolidate debt or renovate. In short, we are in an era of unknowns as no one would have predicted the Nova Scotia housing market to respond like this through the pandemic with record low-interest rates, supply shortages and increasing demand. A few key points to consider in any large purchase is “wants vs needs” and more importantly affordability, as we see rates rise back to pre-pandemic levels and higher. 

First-time home buyers may have little to no idea what they are getting into when buying a home, so as a licensed associate mortgage broker, I can share my professional advice and personal experience with them regarding the purchasing process and educate them on what to expect. My job is to make the experience as stress-free as possible by providing tips and tricks to maximize their purchasing power, so they get the most out of their investment and still live within their means. Most new clients have no idea that the Government of Canada offers programs to assist with their home purchase.  Programs like the RRSP Home Buyers Program, where you can withdraw your 5% down payment from your RRSP and pay it back in annual installments over 15 years followed by a one-time tax credit. Also, there is a down payment match program also offered by the Federal Government.

I hear a lot of casual conversation that saving a down payment is impossible with the high price of rent these days, especially cities like here in Halifax, Nova Scotia.   As your Mortgage Broker, I can show you no down payment option lenders and cashback mortgages that pay your closing costs, but you have to keep in mind these are not without an expense of a slightly higher interest rate for your first term. We also have lenders who will take on applications where one or both applicants have a bankruptcy or consumer proposal, a bruised credit history or just no credit history at all. So, a mortgage broker will gladly work with you to look at one of these solutions and share their professional recommendations and advice on what would be right for you and your situation.

So, you might be asking, what do you need to get a traditional mortgage from my financial institutions? 

  • Well, a solid credit history helps with an excellent credit score.  This shows a top lender that you are responsible for your debt by paying on time and not maxing out or going over your credit limits. 
  • Having a good job with tenure, or if you are self-employed, small business owner or an entrepreneur, you can expect that you will need two years of proof of income so the lender can see that you can afford what you are asking for. 
  • Having the down payment in your bank account for 90 days is preferred, and if not, well you can expect to show the paper trail of where the savings or down payment came from via bank account history.

If any of these areas are not you or even if they are, I would recommend you seek the help of a licensed associate mortgage broker, like myself, as we live this every day and can give you tips to get you on the road to approval and home ownership, remember we work for you. 

If you or someone you know is looking for mortgage advice, please follow me on Facebook or Instagram at #mortgageswithme or my website Tamaravallis.TMGbroker.com.

by Tamara Vallis