A mortgage broker is a mortgage specialist licensed by a provincial authority. Mortgage brokers work for mortgage brokerages and have access to a large network of mortgage lenders in Canada, helping you get the most suitable mortgage for your financial situation. Beside the 6 big banks of RBC, TD, Scotiabank, BMO, CIBC and National bank, mortgage brokers have access to many smaller lenders such as First National, MCAP and Equitable bank, as well as private mortgage lenders.
Mortgage brokers provide value to clients by:
Mortgage brokers also assist clients with the mortgage pre-approval process and the mortgage application. The mortgage broker explains the details of your mortgage, such as the terms, conditions, risks, cost and features. Your mortgage broker will submit the application paperwork to the lender and will assist you in the closing process of your mortgage. These services may be especially useful for individuals who lack sufficient financial knowledge, face language barriers, or individuals who are first time home buyers with a lack of experience with the mortgage process.
Mortgage brokers have access to all the lenders’ rates and requirements. Based on your financial situation, mortgage brokers will negotiate with the lenders and may also offer mortgage buydowns to get you the best interest rate on your mortgage. The customer saves time because the mortgage broker compares rates between different lenders for you.
Mortgage brokers help tailor mortgages for clients with unique financial situations. This may include individuals who are looking for a self-employed mortgage, and individuals who do not have a stable income or a non-existent/poor credit history. Mortgage brokers also aid new immigrant home buyers in the mortgage application process.
Mortgage brokers partner with almost all mortgage lenders in Canada and they always negotiate the best mortgage rates. However, some of them can even offer lower than their best available rate by giving a cut of their own commission to the borrower. Without buydowns, mortgage brokers typically get a commission of 0.8% to 1% for a typical 5-year fixed mortgage.
Mortgage brokers help lend out mortgages for mortgage lenders. In return, the mortgage broker is typically paid an upfront commission by the mortgage lender. Sometimes, the mortgage broker will choose to pass on a percentage of the commissions to the customer in the form of a mortgage buydown by offering the customer a lower interest rate on their mortgage.
CMHC’s 2019 mortgage consumer survey found that mortgage buyers were satisfied with the services of both banks and mortgage brokers and that the two main criteria they used to decide between going directly to the banks or to mortgage brokers was the level of service and the interest rate offered.
Federally regulated lenders, such as banks, are also required to conduct a mortgage stress test to determine if you can afford your mortgage payments. B Lenders, credit unions, and private lenders are not required to conduct mortgage stress tests. Going through a mortgage broker gives you more flexibility and options; however, it doesn’t mean that you need a mortgage broker to reach less known lenders. You might be able to reach many small lenders which don’t have a physical branch directly by calling them.
The 2019 Mortgage Consumer Survey also found that most mortgage buyers contacted around 3 mortgage lenders and 2 mortgage brokers when looking for their mortgage. Shopping around with many lenders and brokers can help you find not only the lowest interest rate, but the best mortgage product that is suitable for your financial situation.
While both mortgage agents and brokers deal with mortgages, the main difference is that a mortgage broker employs mortgage agents, which means that mortgage agents work under a mortgage broker.
Mortgage brokers and mortgage agents both have the same access to the same lenders. Mortgage brokers supervise their mortgage agents. There are different requirements and licenses between brokers and agents.
Terminology can vary depending on the province. In British Columbia, mortgage agents are called sub-mortgage brokers. In Ontario, mortgage brokers need to have at least two years of work experience.
Mortgage broker commissions range from 0.5% to 1%. This commission is paid by the mortgage lender to your mortgage broker or agent as a finder’s fee. You usually will not be able to get a better rate by going directly to the lender or bypassing the broker.
Since the mortgage lender pays the commission, mortgage brokers generally do not charge their clients any fees. Broker fees are usually only charged for mortgages that are hard to find lenders for, such as for private mortgages.
However, having these commissions built into the mortgage rate means that some mortgage brokers that offer “buy downs” can reduce your mortgage rate even further by offering you a portion of their commission.
To see how much a mortgage broker or agent would make on a mortgage, let’s consider a major bank that is offering a commission of 1%. A borrower approaches the mortgage broker looking for a $500,000 mortgage. After the borrower is approved for a mortgage with that major bank, the bank will pay the broker 1% of the mortgage amount.
|Total Mortgage||1% Commission||Gross Commission|
This commission is paid to the mortgage brokerage. If you worked with a mortgage agent, they usually get 15% of the total commission, or $750.
Mobile mortgage specialists are bank employees that operate similar to mortgage advisors. Mobile mortgage specialists are paid a commission based on the sales that they make. Mortgage specialists are different from mortgage brokers because mortgage specialists can connect you to other lines of business that the bank offers, such as for credit cards, savings, or retirement.
However, unlike mortgage brokers, mortgage specialists can only offer products that their bank offers, while brokers can connect you to a variety of mortgage lenders and banks.
Mobile mortgage specialists have flexible working hours that they personally set, which means that you can often meet a mobile mortgage specialist outside of regular banking hours, such as in the evenings or on weekends. Mobile mortgage specialists will also come to you rather than make you come into a branch.
Mobile mortgage specialists with TD work out of their home office, but they also work with a team and through TD's sales management system. This allows mobile mortgage specialists to build their own business under TD's brand.
Dominion Lending Centres is a mortgage brokerage franchisor that has over 380 offices across Canada. There are 2800 mortgage brokers/specialists franchised under the Dominion Lending Centres trademark and together they have funded over 700K mortgages over 14 years. Dominion Lending Centres offers a New to Canada program for newcomers within the last five years with at least three months of full-time employment.
Mortgage Architects, also known as MA, is a mortgage brokerage that operates in all provinces in Canada. Besides new home purchases, renewals and refinancing, Mortgage Architects also offers equipment leasing services to businesses.
The Mortgage Centre is a mortgage brokerage franchisor that has franchisees/mortgage brokers operating in 9 provinces in Canada, excluding Quebec. The Mortgage Centre also offers second and third mortgages.
Canwise Financial is a mortgage broker that operates in most provinces and territories in Canada. They are owned and operated by RateHub.ca and have funded over $7.5 billion in mortgages. CanWise offers a New To Canada mortgage, for permanent residents with a down payment greater than 5%, or non-permanent residents with a down payment greater than 10%, even with a weak credit score.
Verico Butler Mortgages, more commonly known as Butler Mortgage, is a mortgage brokerage that operates in Ontario, British Columbia, and Alberta. They are known for offering some of the lowest mortgage rates in the industry.
How does Butler Mortgage offer such low rates? Butler Mortgage tracks over 350 mortgage lenders and passes volume discounts on to you. What's more is that they "buy down" mortgage interest rates by cutting from their own commission. They will also beat any mortgage rate or pay you $500.
Provincial regulatory bodies govern the real estate market in Canada. The Mortgage Brokers' Regulatory Council of Canada (MBRCC) is a forum to help provincial regulators coordinate regulatory practices between provinces. Nine provinces are members of the MBRCC with the exception of Prince Edward Island.
Mortgage brokers in Quebec are regulated by the Autorité des marchés financiers. Individuals need to pass four stages of certification before becoming a licensed mortgage broker. This includes mortgage broker training, training on professional practice and ethics, and related exams.
The Financial Services Commission of Ontario (FSCO), now merged into the new Financial Services Regulatory Authority of Ontario (FSRA), regulates mortgage brokers in Ontario. A FSRA license is mandatory for mortgage brokers operating in Ontario. Their licensed name and license number must be displayed on all marketing materials and advertisements. If you obtain a mortgage from an unlicensed mortgage broker then you are not protected under Ontario’s Mortgage Brokerages, Lenders and Administrators Act. Private mortgage lenders do not need to be licensed, however they cannot advertise to the public. Licensed mortgage brokers can advertise on their behalf. Ontario requires a minimum two-day cooling off period before signing your mortgage agreement with a mortgage broker. This gives you time to carefully review your contract and terms.
The BC Financial Services Authority (BCFSA) licenses mortgage brokers in British Columbia. The Mortgage Brokers Act also requires private mortgage lenders who lend more than ten mortgages a year to be licensed as a mortgage broker.
The Real Estate Council of Alberta (RECA) is the governing body for the real estate industry in Alberta, where “Anyone who solicits individuals to borrow or lend money secured by a mortgage, or negotiates a mortgage on behalf of another person must hold a licence with RECA”.
You can check if a mortgage broker is licensed by going to the website of the regulatory body for your province or territory. If the broker is licensed, the listing will display the current status of the license and may also include possible restrictions or disciplinary decisions against the broker, depending on the regulatory body. Depending on your province, brokers may be required to state their brokerage license number on their website or on promotional material and advertisements, such as in Ontario.
Mortgage brokers give you access to private lenders who look more heavily at the level of equity that you have in your home, and less so on your credit score. A Lenders on the other hand, such as banks, have a minimum credit score to qualify for a mortgage. The Canada Mortgage and Housing Corporation (CMHC) also requires a minimum credit score of 680 for insured mortgages.
Some mortgage brokers may only work with a small number of lenders, provide limited services, or they may charge additional fees. When choosing a mortgage broker, be sure to ask if they charge a fee, if they are getting compensated by lenders for their referrals, how many lenders they work with, and what services they will provide. This will ensure that you select a mortgage broker that fits your needs and will look after your best interests.
Mortgage brokers are licensed by the Financial Services Regulatory Authority of Ontario (FSRA). There are a few requirements to getting a FSRA license, including:
You will also need to take a FSRA approved course and exam. These courses are offered by Mortgage Professionals Canada (MPC).
MPC's Ontario Mortgage Broker Education Program (OMBEP) comes in two phases: an online portion and an in-class portion. Students have 6 months to complete the online portion of the course. This portion has a final exam with 50 multiple choice questions, a passing mark of 60%, and a 3 hour time limit.
Once students pass the online portion, students will then register for the in-person portion of the course. In this second phase, students will attend class for five consecutive days, Monday to Friday, from 9 am to 5 pm. There is a final exam of 100 multiple choice questions, a passing mark of 60%, and a 3 hour time limit.
Tuition for the OMBEP is $495. The OMBEP certificate is valid for three years.
Instead of taking the OMBEP, you may request for education equivalency to be applied to your application. FSRA will review your education and experience to determine whether it matches the Mortgage Broker Qualifying Standards (MBQS). This review includes a resume, assessment of your qualifications, letters from your current or previous employers, and support from your mortgage brokerage's principal broker.
Mortgage brokers are licensed by the BC Financial Services Authority (BCFSA) in British Columbia. Becoming a mortgage broker is a two-step process. You will need to first become licensed as a sub-mortgage broker, and then as a mortgage broker. There are a few requirements to getting a BCFSA mortgage broker license, including:
An application to become licensed as a sub-mortgage broker in British Columbia costs $1,500, and the mortgage broker license costs $1,900.
The University of British Columbia’s Mortgage Brokerage in British Columbia is the only course approved by the BCFSA to be registered as a mortgage broker. The course consists of a series of assignments, multiple choice and written, that need to be passed in order to register for the final exam. Students have one year to complete these assignments, with no more than 2 assignments allowed to be completed per week.
The final exam is 100 multiple choice questions, a passing mark of 65%, and a three-hour time limit. Completion of the exam will allow you to apply for a sub-mortgage broker license. To be eligible for a mortgage broker license, you will then have to complete UBC’s Broker's Licensing Course.
Structured similarly to the Mortgage Brokerage in British Columbia Course, the Broker's Licensing Course consists of a series of assignments to be completed in under one year with a final examination at the end.
If you are already licensed with the Real Estate Council of British Columbia or have already taken real estate services through UBC's Sauder School of Business, you can take the Mortgage Brokerage Supplemental Course as a replacement to the full BC Mortgage Brokerage Course. You are still required to complete the full three-hour final exam.
Tuition for the Mortgage Brokerage in British Columbia Course is $1,150, while the Supplemental Course is $775. Tuition for the Broker's Licensing Course is $1,150.
You may also receive an exemption from the British Columbia Registrar of Mortgage Brokers, based on your previous education and experience. This will allow you to skip the assignment portion of the Mortgage Brokerage Course and to take the final examination directly. UBC offers a study guide for those taking the exam directly through their Challenge Package.
Mortgage brokers are licensed by the Real Estate Council of Alberta (RECA) in Alberta. There are a few requirements to getting a mortgage broker license in Alberta, including:
The application for an Alberta mortgage broker license costs $575.
Proof of English proficiency can either be a Canadian high school transcript with completion of Grade 12 English, graduation from a diploma or degree program in Canada, completed Grade 12 English in a foreign school through ACESC, or completion of english proficiency assessments.
RECA accepts assessments from TOEFL (minimum overall score of 92), IELTS (minimum 6.5), CELPIP (minimum 7), or CAEL (minimum 60).
Completion of the Mortgage Associates Program is required prior to getting a mortgage broker license. The Mortgage Associates Program consists of the Fundamentals of Mortgage Brokerage course and the Practice of Mortgage Brokerage course.
The Fundamentals of Mortgage Brokerage course is run by the Real Estate Council of Alberta (RECA) and costs $1,250. The Practice of Mortgage Brokerage is run by the Alberta Mortgage Brokers Association (AMBA) and costs $1,500. These courses are completely online, while final exams are held in-person as exam testing centres.
You must complete the Mortgage Associates Program within one year. The passing grade for the exams is 70%.
Looking to become a mortgage broker in Montreal or Quebec? Quebec mortgage brokers are licensed by the Autorité des marchés financiers (AMF) There are a few requirements to getting a mortgage broker license in Quebec, including:
The AMF requires the completion of the Mortgage Brokerage Qualification Program (MBQP) before being eligible to write the final examinations. All courses are available only in French. Courses in English are expected to be added in the coming years.
AMF in-person course providers in Montreal include Collège CEI and Académie de l’entrepreneurship québécois. Online course providers include Collège CEI, Académie de l’entrepreneurship québécois, and Mortgage Professionals Canada.
The MBQP consists of two modules: Professional conduct and professional practice (F-116) and Mortgage brokerage (F-611). Mortgage Professionals Canada structures their program into two sub-programs: CHQ101 for those new to the industry and CHQ201 for those with at least two years of experience. CHQ101 lasts nine weeks while CHQ201 lasts four weeks.
After completion of two final exams, candidates will undergo a probationary period where they will work at least 28 hours per week for 12 weeks. After the probationary period is over, candidates can apply for their Quebec mortgage broker license.