| In a nutshell, a mortgage broker acts as the | | | | Professionals (CAAMP). |
| 'go-between' a borrower (you) and the lender (typically | | | | Many people aren't sure where brokers actually |
| the big Canadian banks). Mortgage brokers act on | | | | source the funds from. A recent report by Canada's |
| your behalf offering their expertise and contacts for | | | | leading mortgage systems supplier, showed that they |
| free, and receive their commission from the lenders | | | | secured home loans through the following channels |
| only once a mortgage is arranged. There may be | | | | through their network in April 2008: |
| charges for their services if you have an exceptional | | | | Banks: 50.68% |
| situation, such as very poor credit, as they may need | | | | Mortgage Banks: 41.92% |
| to spend more time on your application. | | | | Sub Prime: 4.25% |
| They are able to get the best rates for homebuyers | | | | Credit Unions: 3.14% |
| and their rates are typically discounted when | | | | The actual mortgage rate arranged by the broker, |
| compared to the big bank's posted rates because | | | | could be influenced by many factors, some of which |
| they arrange so much volume for the lenders (almost | | | | are: |
| $50B last year). As a result, many times the banks and | | | | What type (open or closed) are you looking for? |
| other lenders compete amongst themselves to offer | | | | Is it a fixed rate or variable rate (adjustable rate |
| the broker the best rate in order to secure their | | | | mortgage ARM) |
| business. Many deal with over 65 lenders, and this is | | | | Is this a single home mortgage loan? |
| the reason why they can get the best rate for almost | | | | Or do second or third loans exist? |
| any person's situation. | | | | How long do you want the mortgage amortized over? |
| The residential mortgage market is extremely lucrative | | | | Is this is a refinancing? |
| and competitive, as there were $191B worth of | | | | As is the case with brokers in other industries such as |
| mortgages approved last year by 80+ lenders. As a | | | | insurance, mortgage brokers are generally former |
| result, brokers are becoming more popular as more | | | | employees of the lenders such as banks. As a result, |
| people are turning to them to find the lowest rates, | | | | they know the ins and outs of the industry, who to |
| representing an estimated 25-30% of mortgages being | | | | contact and where to find the rates across Canada. If |
| arranged according to Jim Murphy, president of the | | | | you're looking for help arranging your next mortgage, a |
| Canadian Association of Accredited Mortgage | | | | broker, may just be a sound option. |