Referrals are still the primary method of getting introduced to a mortgage broker when buying a home or an investment property, however more and more Canadians are searching for mortgage brokers online. Borrowing hundreds of thousands of dollars is a serious undertaking and requires due diligence. Based on my years of experience here is a checklist of how to find a trustworthy mortgage broker.
Trustworthy Mortgage Broker Checklist
- Online Presence: Everyone, well pretty much everyone, has a website nowadays. However, are they active in publishing material relevant to the market? Are they experts in a niche market (real estate investment, self employed, first time home buyers, bad credit, private mortgages....) or are they the jack of all trades? Going through their website you will get a good feel if they are experts in a specific field.
- Strategy vs No Strategy: Quoting rate requires no skills, afterall most brokers and lenders have the same rates with a possible difference of up to 0.1% ($100 for every $100,000 per year). Unfortunately, obtaining a mortgage licence is easy; one course, a few hundred dollars and off you go! If a broker or agent is only quoting rates without explaining the following, run away:
- Pros and cons of each product
- How each product helps you achieve your financial goals
- Fine print terms (penalties, mortgage features)
- A plan to pro-actively manage the mortgage post funding
- Execution: A financial planner engages their clients on an ongoing basis to adjust their portfolios as economic conditions and clients' lifestyle change, why wouldn't you expect the same from your mortgage broker? Building net worth is achieved through 2 ways: 1/ increasing assets and 2/ decreasing bad debt. How will the mortgage broker track your mortgage and keep you informed? Why not have a debt manager on your team?
- Full Time vs Part Time: Since mortgage agents have a low barrier of entry, there are some out there who operate on a part time basis. There is nothing wrong with someone building their business to transition full time into the profession, but would you trust a part time lawyer, a part time doctor, a part time real estate agent or a part time contractor?
- Experience: I'm into sports, so I'll use a sports analogy: great coaches used to be players in the past. If you are looking to invest in real estate, shouldn't you engage a mortgage broker who invests in real estate, whose been through the ups and downs? If you are self employed, shouldn't you approach a full time self employed mortgage broker who personally experienced the challenges of getting mortgage financing? If you are a first time buyer, shouldn't you meet with a mortgage broker who had a terrible experience getting a mortgage for their first home?
- Job Interview: I view hiring a mortgage broker as applying for a job. You probably can recall going for a job interview, where the interviewers asked lots of questions and based on your answers (and references) got a gut feel for you. Hiring a mortgage broker is the same, use the above information to ask questions and get a good gut feel for who you should hire. You are trusting a professional with hundreds of thousands of dollars.
If you are buying your first home, an investment property or you are self employed and looking to interview a professional mortgage broker, please contact me.