GOING FOR BROKER CAN
BRING BETTER MORTGAGE DEAL

Extracts from an article written
by Ellen Roseman
TORONTO STAR - May 28th 2000

Mortgage Brokers can help you get a better deal when you're borrowing to buy a house, but they have a low profile.

8% of residential borrowers use a Mortgage Broker, according to a survey of 1,300 households sponsored by Canada Mortgage and Housing Corp. and the Canadian Institute of Mortgage Brokers and Lenders.

Among first-time home buyers, 18 per cent consult a mortgage broker when arranging their financing.

"Mortgage brokers seem to be best positioned to provide services to inexperienced first-time buyers" the survey concluded.

When you go to a bank, you have only one lender's products to choose from. You're often pressured to buy whatever the bank is pushing, be it short-term loans or variable rates or cashback offers.

Mortgage brokers deal with many different types of lenders, and offer a choice of products and rates.

Most importantly, brokers are sitting on the same side of the table as you are. As intermediaries with nothing to sell but their service, mortgage brokers will try to get you the best deal possible.

When working with a first time home buyer, a mortgage broker will take time to explain the fundamentals: down payments, pre-payment privileges, high-ratio mortgages, second mortgages, vendor take-back mortgages and the federal home buyer's plan.

To get a bank loan, you are required to spend no more than one-third of your income, before tax, on principal, interest and property tax payments. Self employed income is often discounted by banks.

When the bank says no, a mortgage broker will look for loans at a wide range of financial institutions, including trust companies, insurance companies, credit unions and private investor funds.

The Financial Services Commission of Ontario, an arms-length agency of the provincial finance ministry, regulates mortgage brokers.

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