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Banks
The banks, like BMO, CIBC, ING, RBC, Scotia, and TD Bank, offer their own mortgage rates and services. Borrowers must negotiate directly with the bank to arrange their mortgage. Banks often provide discounts for borrowers who consolidate mortgage and banking services with them.
Mortgage brokers
Mortgage professionals, however, have access to multiple lenders: banks, credit unions, and trust companies. Mortgage brokers are licensed mortgage specialists, who negotiate with the financial institutions to get the best rate for the borrower. Reputable mortgage brokers are not affiliated with the banks, and their goals are to find the best rate for their client: the borrower.
Mortgage brokers access the entire mortgage market, and as such can often find beneficial terms and rates for their borrowers. If the borrower has poor credit, they may be turned down by a bank. The mortgage broker will often be able to find a lender, despite the poor credit. The terms will, of course, reflect the inherent risk the lender must take in this case.
Profits
The mortgage industry is a huge part of banks' and financial institutions' earnings. In 2013 residential and non-residential mortgage assets made up 26 per cent of the total assets of Canadian banks, according to a Bloomberg article. Canada's banking industry is one of the world's soundest.Banks are well able to cope with interest rate increases, though these rate increases will affect current and future mortgage borrowers.
Renewal
When their mortgage term is up, borrowers must renegotiate directly with the bank if they wish to renew or switch to a bank. Borrowers who choose to renegotiate for themselves are advised to research extensively. It could benefit them to switch their mortgage to another bank.
Mortgage brokers will negotiate for the borrower, and could find better rates. Consumers must, however, make sure they are well-informed.Both banks and mortgage brokers want to keep the borrower happy, so that the borrower will renew the mortgage with them. Mortgage brokers are paid by the lender, one of the more than thirty lending institutions in Canada.
Advantages of mortgage professionals
Getting advice from a mortgage professional may be a sensible option for people who see their mortgage as one part of their overall financial plan. A good mortgage professional will calculate how the borrower can best take advantage of the mortgage, perhaps by using the equity in the mortgage, to build net worth.Borrowers should consider very carefully before deciding on their mortgage. Research and professional mortgage advice will help them make the best financial decision.
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