Brokers are only for bad debt??!!
2009-11-18 | 12:40:18
We are not sure where this comment came from, though we just completed a mortgage for a client who was turned down by C.I.B.C. because of one late payment and was told a broker could not do better than 10% interest. I guess they did not want the client to go elsewhere and get a mortgage now.
There was a time when this statement may have been true, and if your credit is truly poor, say below a 550 beacon score, the only way to obtain a mortgage, without waiting to repair your credit, would be with a private lender at rates a s high as 15%. The staff at DLC Mortgages and More try to persuade people in this situation to wait a year or so and work on improving their credit by paying on time and paying their revolving debt down below 66% of the credit limit
The truth is mortgage brokers are given a range of rates that they can offer their clients, the higher the rate, the higher the commission. Many brokers under the Dominion Lending Centre banner always quote the lowest possible rate to their clients, as does Mortgages and More.
For example, on the date of this posting, banks were offering posted rates to their best clients for a 5 year fixed rate mortgage at 5.85%. We can offer the same client 4.19%.
How do we do it without charging our clients a fee? Well, the bank provides brokers with a lower rate because it is cheaper for the bank to deal with a broker than with their own staff. They don’t pay for our office space, electricity, equipment, internet access, wages, pensions etc. They can then offer us a discounted rate that we can then pass on to our clients. The bank is only too happy to pay us for our services because we have done all the legwork for them.
It is a great system. It is too bad that there are some who will continue to try to get you to deal with a bank, rather than a broker. Remember, whatever brokerage you deal with, ask to see the rate sheet, or expect a discount of at least 1.5% below bank posted rates