Most people can’t afford to own a home without a mortgage. In recent years, the western Canadian housing market has seen skyrocketing prices and a multitude of changes within the lending system. First time home owner lending programs have been altered, loan amounts have been made more strict, and getting approved for a mortgage has become more difficult, especially for individuals with lower or less steady income (such as small business owners). Between the modern day cost of owning a home and these policy changes, many Canadians have been left wondering where the best place to turn to is for their mortgage needs. This is especially true of first time home owners. As the housing market becomes more volatile, prospective homeowners are more keen than ever to find the best possible rates for their mortgages. As of 2017, 39% of homeowners sought a mortgage broker to arrange their loan, and that percentage appears to be on the rise. While the question of bank vs mortgage broker is a common one, more recently the question has been whether a mortgage broker can get you a lower rate.
Brokers vs Banks
One of the main reasons people choose to consolidate their business with a mortgage broker is because brokers have access to the market that banks don’t. Mortgage brokers offer prospective buyers the chance to “shop around” the market. They can negotiate and compare rates for you, whereas a bank can only see and offer their own. With the current state of the housing market, the ability to shop around for the best rates has become a high priority for buyers. People are also looking at an increasingly volatile loaning system, meaning that having a third party to represent and negotiate for you can be invaluable to certain people. There are downsides to having a mortgage broker. Primarily, they are less capable of helping you view your mortgage in terms of a long-term financial plan that incorporates other major financial milestones like RESPs and retirement. Also, your local victoria mortgage broker doesn’t act as your lender. You still end up signing your mortgage with a bank, trust, or credit union. All considered, can mortgage brokers actually get you a lower rate?
How do I get the lowest rate?
The simple answer is yes. Unlike banks, mortgage brokers have the ability to access and compare mortgage rates between a multitude of lenders and compare these rates with the market. In basic terms, mortgage brokers are experts in their field. Because their sole focus is mortgages, they are the best way to get a broad view of your lender options. By extension, you have the opportunity to choose the lowest rate. This doesn’t always mean you’ll end up with that rate, since there are numerous factors to be considered before settling on a lender. So while a mortgage broker can’t guarantee the lowest rate, their services are the only ones that allow you to track the lowest rate down in the first place. So if a low rate is your top priority, working with a mortgage broker is the the best route to take.