The simple answer…. Choice!
Unlike your bank representatives, mortgage brokers have access to numerous lenders including banks, credit unions, trust companies and more. This allows brokers to assist all types of clients. You may have heard of brokers helping people that have had (or have) credit issues, those facing income challenges, or others that are not able to prove income through traditional means. But Brokers are also able to assist with accessing various lender policies that may allow you to qualify for more funds, as well as provide unbiased advice to the specific differences in available lender products, and even provide services to those that are looking for better rates, flexibility etc.
The gist here is that mortgage brokers understand the products offered by numerous different lenders. This allows them to place you into a mortgage solution which aligns with your current and future needs. A great broker will also take the time to explain differences between lender products. For example, how lender penalty calculations should you break your mortgage, or what your pre-payment privileges are, or how different lenders register their mortgage, etc.
Having access to multiple lenders, also means having access to a variety of qualifying guidelines. We torched on this topic above. Not all lenders have the same internal policies. Diversity in lender policies mean that there may be a lender that has different credit requirements, or one that may calculate income differently, or another that may have different products that are beneficial to you, etc. Having a good broker that understands the differences and can place your mortgage with the right lender is a huge asset to your advisory team!
So, what about the cost?
Mortgage brokers are generally paid a referral fee by the lender they place you with once your mortgage is completed, which means, in most cases, no additional cost to you. Brokers are looking out for your best interest as they do not work for any one particular lender… They work for you! Brokers will look for the best product and rate that best aligns with your needs now and in the future. However, there are some occasions, typically when using alternative or private lenders, that a broker fee may need to be charged. Your broker should inform you of any out of pocket costs they expect you to incur when assessing your qualification, and advising what available solutions that you may qualify for.