I was asked the other day what makes a Mortgage Broker a good Mortgage Broker and I have always had an answer to that question but I thought I’d do a little research to see what an answer might look like coming from a third party.
The MBRCC (Mortgage Broker Regulators’ Council of Canada) conducted a survey and the results formed a few interesting findings and they help to form an answer to the question I was asked. The MBRCC would suggest that you find a Mortgage Broker who is aware of three main factors in recommending a suitable mortgage:
• Appropriateness of the mortgage, given the borrower’s needs/circumstances
• Affordability of the mortgage, given the person’s ability to repay it
• Alternatives available to the broker
o Some consumers are under the misconception that brokers recommend mortgages from all lenders. Very few do. In fact, the majority (53%) of brokers say their role is only to educate clients on the mortgages they, the broker, can directly sell
o While regulators don’t expect brokers to know all products, they do, however, expect brokers to recommend the most appropriate mortgage that they have access to
One other key takeaway from a recent report involves setting expectations. The MBRCC says it’s vital for brokers and customers to have “a common understanding” about the type of product(s) or advice being provided by the broker. You don’t want a situation where clients think they’re getting objective advice but the broker does 80% of his/her business with one lender. Disclosure is everything.
So, what can consumers draw from the survey that the MBRCC did? Well, there are always exceptions and other criteria apply, but if you’re looking for the best possible service and advice, odds are you’ll get it from a broker who:
• Makes brokering their full-time income source
• Has been in the business for at least five years (or is under the direction of a broker who has)
• Compares all of their lenders to see which offers the most suitable mortgage (or knows which do, without needing to compare)
• Documents why they make the recommendations they do
• Regularly uses more than 3 lenders
• Follows the rate and mortgage market daily
• Does a comprehensive assessment of the borrower’s needs and mortgage affordability
• Believes they represent the borrower, but recognizes their obligation for full disclosure to the lender
I hope this helps to explain what to look for in a good Mortgage Broker, and maybe even more importantly, why a Mortgage Broker has an advantage over the Banks Mortgage Specialists.
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