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.
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 by ratehub.ca and have funded over $7.5 billion in mortgages. CanWise offers a New To Canada mortgage, for permanent residents with a downpayment greater than 5%, or non-permanent residents with a downpayment 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 OntVerico Butler Mortgages, more commonly known as Butler Mortgage, is a mortgage brokerage that operates in Ontario, British Columbia, and Alberta. Butler Mortgages offers a lowest rate guarantee if you have signed a mortgage with them. They will match the lower rate or give you $500 cash if you do find a lower mortgage rate.
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.