I read a BLOG this morning with the title “Quantity or Quality” and it really peeked my curiosity. The original BLOG can be found here
As a broker I have never really sat back and looked at what the phrase “access to 40 lenders and 200 products” actually meant. I myself have advertised this and portrayed myself as the broker of choice due to the amount of options I have available. The truth is this (even though I have access to more lenders) I really only utilize about 5 lenders. The reasons are numerous and some of these said reasons are listed below. As a broker I am constantly looking out for my clients and what they want. I listen to what my clients tell me (ie Fixed or Variable) but I also educate them on the pros and cons for each product. I find that once the client has all the facts they can make an informed decision.
Each lender we use has different products, different commission structures, different rates, status, bonus levels etc etc. I take what my client is telling me and put them in the best product that fit’s their needs. This actually could mean less pay, higher rate (or lower rate), client may want to be with a bank that they can visit, the differences are numerous. The bottom line is I am providing a service to my clients and giving them the tools and education they need to make the decisions that they want and are comfortable with. I always like the saying “no question is stupid if you do not know the answer.” I like to tell my clients this so they know they can ask me anything that has to do with the mortgage process, it’s too important of a transaction not too.
The article lists the following 8 things you should ask a broker before dealing with them. I definitely agree with these but you should also be interviewing anyone who is looking after your mortgage needs, this includes your bank. Remember it’s your money, you deserve to get the best service and product that fits your needs. So if you’re well-qualified then 8 things you need to keep in mind are:
1 How many lenders the broker has top-tier status with. (Normally a broker with top tier status gets special treatment which could be better rates and service)
2 How many lenders the broker actually knows. (This refers to how much the broker knows about an individual lenders policies, procedures, benefits and downsides and not just knowing the lender name and they deal with them)
3 How many lenders the broker has actually closed a deal with. (If the broker has only closed one deal in the last couple of years with a lender then they are probably not aware of this lenders guidelines and limitations)
4 What percentage of the broker’s deals go to their top three lenders. (If a broker sends two out of three clients to their top 2-3 lenders, and offers you just a so-so interest rate and so-so advice, be suspicious)
5 Does the broker quote market rates for the lenders with tiered pricing (The lender normally pays more for the higher rate. A reputable broker should never quote a higher rate in exchange for higher pay)
6 How long has the broker been in business. (There are always exceptions but there’s a strong correlation between broker tenure and knowledge. Lack of experience by a mortgage advisor can sometimes be costly for a borrower)
7 What is the brokers approval ratio. (Is the broker efficient? Or does a third or more of their applications get declined).
8 What is the brokers typical turnaround time. (If timing is an issue you need to know if this broker will take a day or a week to get your deal approved).
The article was a great eyeopener and I strongly believe in all the points above. Take the time and read the full blog and if you are doing anything regarding mortgage financing then please ensure you ask the right questions. If not it could cost you in the long run.
Eric Gall is a mortgage specialist for TMG -Atlantic. If you are purchasing, refinancing or renewing your mortgage contact Eric at firstname.lastname@example.org or visit http://avantimortgages.ca/