I have mistakenly heard a bank employee, who deals in mortgages, referred to as a ‘Mortgage Broker’, but there is a very big difference between a Mortgage Broker and a bank’s specialist.

The role of a ‘Broker’ is to, literally, broker (negotiate) a deal between two parties. They are an intermediary and is not an employee of the parties. A Mortgage Broker does, however, work for you, the client. Bank specialists are employed by the financial institution to work on the bank’s behalf.

A Mortgage Broker has the ability to offer you mortgage products from a number of financial institutions – including major banks, lenders whose products are not available to the banks (trust companies etc.), and private lenders. Because a bank specialist works for the bank, they can only offer you their institution’s products.

There are also a lot of myths about how Mortgage Brokers are paid. Brokers are paid a very similar commission, no matter what rate is offered to the client – so they are always motivated to get the lowest rate possible for the client. Bank specialists’ rate of pay is generally reduced in direct relation to the amount they discount your rate from the bank’s posted rate.

In Alberta, as is the case across most provinces, Mortgage Brokers must be licensed and are subject to a strict set of requirements and in addition to the courses undertaken to become certified, we also have to take continuing education courses to maintain our license. Accredited Mortgage Professionals (AMP), another level above the Mortgage Broker licensing requirement, must take additional continuing education courses in order to maintain their accreditation. AMP’s have to have a minimum of two years in the industry and must complete an professional exam in order to achieve their designation. Bank specialists are not licensed and require no formal training because banks fall under the bank act.

Because Mortgage Brokers don’t work for a specific lender, you are assured that you will be given impartial advice. A bank specialist has a limited number of their own institutions products and while it may not be the best mortgage product out there, they don’t have the ability to offer you anything better through another lender. A bank specialist is generally partial to their own bank’s products and does not have access to other lenders.

Mortgage Brokers use their knowledge and experience to negotiate the best possible rate and product for you from a number of lenders. When you see a bank specialist, the mortgage negotiating is typically left up to you. For conventional financing, the services of a mortgager broker are generally provided at no cost to you. Fees charged to the client typically only come into play for commercial and private lending situations.

If you go to each bank and try to negotiate with them on your own, you are not only limiting the products that could be available to you, but your credit could be adversely impacted. Each financial institution will pull your credit whereas working with a Mortgage Broker, your credit report is only pulled once, regardless of the number of lenders we submit your file to.

Mortgage Broker’s work on a referral basis and are self-employed. The majority of business is done through word of mouth referrals. A Mortgage Broker is motivated to ensure his/her clients are extremely happy and satisfied to keep his/her business growing. A bank specialist is generally an employee of the bank, generating business through the bank’s existing customers.

Mortgage Brokers are generally available for unconventional appointments and times of day – at their client’s convenience. A bank specialist if generally only available during regular banking hours.

In addition to the differences noted above, our business, at Ashton Mortgage Solutions, is based on educating our clients to ensure they are considering their future, and the multitude of features and limitations of the product they are considering.

For example, did you know that some of the major banks use a collateral charge when registering your mortgage on title? What does this mean to you? Well, it could mean legal fees at the end of your term if you want to switch lenders because your current lender isn’t offering you competitive rates at renewal.

Did you know that the majority of mortgage contracts in Canada are broken at around the 3 year mark? This could mean a payout penalty should you have chosen a longer term. Did you also know that payout penalties are not calculated the same way at each lender? We can educate you about these differences to ensure you are making an ‘eyes wide open’ decision.