bout de papier, Vol. 5, No. 4 (1988) — Winter 1988 // Hiver 1988, pp. 37–38
As a real estate lawyer, I am frequently asked questions by my clients about Mortgage Brokers.
I have asked Elaine Simpson of Coulter Financial Corporation to address some of the more commonly asked questions, and I hope her answers will help better inform those readers who may be considering using the services of a Mortgage Broker.
Elaine, what exactly is the function of a mortgage broker?
A mortgage broker really has two clients, the person who is seeking to borrow money that can be secured by a mortgage, and the institution that is seeking to lend mortgage backed money. It is the mortgage broker’s function to ensure both parties to the transaction are fully aware of what the other party is looking for and fully satisfied with the ’deal? In other words, each party must be assured that all terms and conditions of the transaction meet their needs and meet with their approval. Both the lending institution and the borrower will have requirements to be met and it is the broker’s job to put the right borrower with the right lender.
What does a mortgage broker do for the borrower?
We like to think were in the business of saving people money. For example, as a broker with Coulter Financial Corporation, I deal with more than forty different lending institutions, including all Chartered Banks, Trust Companies, Life Insurance Companies and private lenders. There is a vast network of lenders out there that many people are not aware of. By being on top of the market, I can advise a borrower where the best possible deal for his or her situation is at the moment.
What is best for each borrower will vary, depending on his or her financial situation and the property being purchased or refinanced. Perhaps one person might be interested in finding a lender with a twenty (20%) percent prepayment privilege per year instead of a ten (10%) percent privilege. Another borrower might be considering putting an offer in on a house or investment property and be looking for instant approval or pre-qualification for a mortgage. The borrower would then be free to put in what is called an unconditional offer, which is usually more attractive to a vendor than a conditional offer, with the result that the borrower could save money. That is, a vendor might be willing to let a property go at a slightly reduced price if the offer is not conditional on the purchaser taking ten days to see if he can arrange financing. Yet another borrower might be interested in a transaction that does not qualify as what could be called a bankable’ deal; the type of transaction some financial institutions would have no interest in approving. Whatever the case, a good mortgage broker will look for the best fit between borrower and lender, keeping the interests of both parties in mind.
Are there any advantages to using a mortgage broker?
Besides the advantages described above, a mortgage broker’s experience and expertise in the industry is the biggest advantage a borrower will get from using a broker. Most brokers have worked for several years in large financial institutions, giving them a good background in lending principles. By broadening their scope as brokers, they become expert at placing mortgages with numerous lenders. Another advantage is the mortgage broker’s accessibility. We make ourselves available to people when they are most likely to need us, in the evenings and on weekends. For the most part, approval with a mortgage broker is only a telephone call away. Remember, we are our own ’Head Office, and have the authority to approve an application instantly.
What types of mortgages can a mortgage broker arrange?
There is basically no mortgage that a mortgage broker cannot arrange. In addition to placing mortgages on residential properties, we can place mortgages on vacant land, investment property, commercial/industrial property, agricultural property and mobile homes. We also arrange construction or building mortgages for the person who is building or renovating. And remember, we not only mortgage what you buy, we also mortgage what you want to sell to make it attractive to a prospective purchaser.
Are there any other financial arrangements a mortgage broker will look after?
Yes. If a client is unfamiliar with the city we can recommend financial institutions close to his home or work place. In some circumstances a broker will arrange for a consolidation loan at the same time as a mortgage, for a person who would not otherwise qualify for a mortgage. We can also arrange for lines of credit for the investor or commercial client. The commercial client may also ask us to help in setting up independent business loans. Any combination of these arrangements could be included in our ’tailor-made’ packages. The broker will always make every attempt to accommodate the needs of a borrower.
What sort of fees does a mortgage broker charge a borrower?
As members of the Mortgage Broker’s Association, our fees will normally reflect the complexity of the transaction, subject to the broker’s discretion. The consultation is given free of charge, however, and I recommend anyone looking for a mortgage see his or her broker first. During this interview an application is completed and the information provided gives the broker an opportunity to assess the needs of the borrower and the degree of complexity of the arrangements he or she requires. At this time, the broker will advise as to what options are available, the amount of fees to be charged, and the method of payment of the fees.
But bear in mind, that at Coulter’s, our recommended policy is to charge no broker’s fee in cases where a borrower has been approved for identical financing at his or her own bank.
In cases where an applicant cannot confirm his income or he has declared bankruptcy or the property he wants to buy is commercial, the fee will, generally speaking, be based on a percentage of the total financing arranged, starting at 1%.
Any last comments?
Only to say that mortgage brokers like to save borrowers not only money, but the time and energy necessary to put the right package together to meet their needs. Our job is to make sure you get what you want without any last minute surprises.
I would like to thank Elaine Simpson of Coulter Financial Corporation for her contribution to this column.
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Originally published in bout de papier, Vol. 5, No. 4 (1988) — Winter 1988 // Hiver 1988, pp. 37–38. Read the rest of this issue →
