What is a Mortgage Broker?

By: Cynthia Legault

A mortgage broker is a trained professional who is licensed to represent borrowers and assist them with obtaining the best possible mortgage financing from a wide selection of lending sources.
To become a licensed mortgage broker in Ontario individuals must meet the education requirements defined by the Financial Services Commission of Ontario (FSCO), the regulator of Ontario’s mortgage brokerage industry. Education requirements include successfully completing a mortgage agent education program and exam approved by FSCO; obtaining a mortgage agent’s license and spend a minimum of two years licensed as a mortgage agent within the three year period prior to applying for a mortgage broker license; and successfully completing a mortgage broker education program and exam approved by FSCO up to three years prior to applying for a mortgage broker license.

A mortgage broker will help to determine a borrower’s objectives and review mortgage rates and options offered by avariety of lenders in efforts to findthe perfect mortgage package that will meet their long and short-term needs.

Mortgage brokers have access to a large number of mortgage products available through traditional banks and trust companies, corporate and private pension funds, and assorted private lenders.

Mortgage brokers are paid by the lending institution only after the mortgage has been finalized. Their rate is based on the size of the mortgage, not the interest rate,so borrowers can rest assured that they will receive the most cost-efficient mortgage available to them. A mortgage broker’sservices are always free to their clients.

If a borrower does not qualify for a traditional mortgage due to poor credit or high debt a mortgage broker might seek mortgage financing from a private lender. In this situation there is the possibility that the private lender may charge a fee, however, a mortgage broker is always required to disclose this information to a borrower before commitment.

Shopping for a mortgage can be time consuming and difficult for an inexperienced borrower.Because mortgage brokers constantly review the mortgage market and stay well informed about all the mortgage products and rates available they can save their clients valuable time and money.

Having a mortgage broker present to a lender on the borrower’s behalf improves their odds of receiving the best package and rate with their first application.

Since mortgage brokers are not affiliated with any specific financial or lending institution they can provide non-biased advice on a vast selection of mortgage products to find the product or rate that best suits their client’s needs.

Banks typically have a limited number of pre-packaged mortgages available to them. Mortgage brokers enjoy direct access to a large variety of mortgage products and lenders, from traditional to unconventional. This wide-ranging access can also create greater leverage in negotiations as assorted lenders bid on the best rate for individual clients. If a borrower decides to seek a mortgage from their own financial institution a mortgage broker may be able to get their client a better rate than a borrower that is not represented by a mortgage broker.

For borrowers who have less-than-ideal credit scores, high debt, or who can only afford a small down-payment, a mortgage broker is more likely to find a competitive interest rate. Some Brokers will also provide basic credit counselling and mortgage planning tips to first-time home buyers.

Mortgage brokers have the expertise as well as the training to save their clients time and money, eliminate confusion from the borrowing process, and create the perfect match between buyer and lender.

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Cynthia Legault works as an Executive Assistant at Canadian Association of Accredited Mortgage Professionals (CAAMP). CAAMP is Canada's national mortgage industry association and the leading provider of value, service and advocacy for mortgage professionals. Feel free to visit their website at caamp.org/ to learn more on how they can help you about mortgage agent course.

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