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We've all seen the TV commercial. The concerned homeowner, huddled with his insurance broker, asks "Who do you work for?". "Why, I work for you!" the broker emphatically announces. The insurance industry has done a great job promoting the independence of their brokers. But how independent is your mortgage professional? First, we should define what a Mortgage Broker is. According to The Mortgage Brokers Act of Ontario, a Mortgage Broker is "a person who carries on the business of lending money on the security of real estate, whether the money is the person's money, or that of another person. Mortgage Brokers are required to be registered with the Ministry of Finance, and complete a comprehensive education program administered by Seneca College. Mortgage Brokers are required to give their clients detailed disclosure about the transactions they are arranging. There are currently about 400 registered mortgage brokerage firms in Ontario, represented by about 2,000 agents and consultants. However, this is only a fraction of the number of people arranging mortgages for the public. Most major lending institutions employ Mortgage Development Officers, employees of the institution, whose job is to create mortgage product for that institution. Most of these MDO's have no formal mortgage training, are not required to provide the detailed disclosure to their clients, and are interested in selling only their employers' products. Lawyers are another group that frequently arrange mortgages for their clients. While they are trained in the legal aspects of registering mortgages, their experience in the financial aspects of the transaction is limited. As for disclosure, well... Registered Mortgage Brokers are truly independent. They do not work for any individual institution or lender, and their main objective is to get their clients the best possible mortgage that they qualify for. Technological advances, including the electronic transfer of mortgage applications to lenders through such systems as Lender Specific Systems, and Morty Systems Inc. ensures the integrity of the data transmitted, and a speedy response to the funding request. Why should you choose a mortgage broker? Not all mortgages are alike. The interest rate should not be your only concern when arranging financing. Prepayment options, portability, flexibility are all important aspects of your mortgage. Your individual needs play an important part of the mortgage transaction. A Mortgage Broker will take the time to determine what it is you really need, and shop the market to get the mortgage that best suits your requirements. Maybe a CMHC insured first mortgage is not your only option. Maybe a conventional first mortgage, and a small second mortgage for a shorter term will be a better fit. A Mortgage Broker can determine how appropriate this scenario is, and can quickly and professionally arrange the required financing. How does a mortgage broker get paid? Most major lending institutions will pay a referral fee to a Mortgage Broker for sending them quality, qualified, mortgage applications. If you do not qualify for traditional institutional financing, the Mortgage Broker may be able to locate alternate sources of funds that are prepared to lend money to someone in your circumstances. Do you have to pay for this service? Maybe, but the total costs will be completely disclosed to you in an easy to understand and professional manner. Don't be fooled by all of the hype. The banks didn't make over $5 billion in profit last year by looking out for their clients. An independent Mortgage Broker has your best interest in mind. You might spend days researching the various products and services available to you. If you ask the right questions, you might even get the right answers. Leave the shopping to the trained professionals. "Who do you work for?" The Independent Mortgage Broker works for you!
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