How many lenders do Mortgage Brokers work with? What are these lenders, and How does this benefit me?
Across Canada, there are over 230 lenders that a Mortgage Broker could potentially work with. This said, most Brokers will focus on about 10 – 15 core lenders, and even more specifically will have 2-4 lenders that will gain the majority of that Brokers business. This focus is important, because excellent lender relationships help customers in a big way. But it’s ultimately important to really know how many core lenders a broker works with, and more specifically why they are suggesting the lender that they are, among the many available. Beyond the traditional service standard of ‘giving advice’ a Broker should educate and empower you – the customer – to be confident in the big decision you are about to make.
Top Mortgage Lenders that Brokers Use
As of Summer 2015, the Canadian mortgage lenders that Brokers typically use can be seen just below. As you review, please note a couple important things – (1) Because a lender is popular among many Brokers, does not necessarily make it the best lender for you and also, is not always indicative of the quality of the lender rate or product. (2) These numbers (below) total up to just over 80% which leaves almost 20% of the lenders who Brokers submit to, unaccounted for. There are several ‘smaller’ lenders that lend billions of dollars, and these should also be kept in mind when shopping for your absolute best rate and terms. There are sometimes new lenders, and these numbers are often changing as well. So there is some flux here, but the following will give you a pretty good idea.
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When working with a good, reputable Broker, that Broker will want to maintain their relationship with you as well, and earn your repeat business. So they will remain available for the long term to help with questions and to make changes. If the Broker is more proactive, they will also continue to scan the market for long term opportunities and may move you to a different lender if it makes sense and saves you money. So as informative as it may be to see some of the lenders that a Broker can provide access to, the ongoing service provided by the independent Broker themselves is where the core value is likely to remain, and should not be overlooked. In other words, you have a mortgage lender AND your Broker in your corner to rely on throughout the course of your mortgage.
Secrets of the Mortgage Business – ‘Unbranded’ Use of Big Bank Mortgage Money
Very often, a big bank will decide to invest its mortgage funds through a Broker focused lender, or what’s known as a ‘Monoline’ lender in the industry. For example, RBC has historically been a key money provider/ investor behind Merix Financial. While most mortgage shoppers may not have heard of Merix, they have more than likely heard of RBC. The reason that a Big Bank like RBC would work through a lender like Merix, is that they won’t confuse customers who may visit a bank branch and a Broker while mortgage shopping. Yet the Bank gains access to thousands of Brokers to potentially ‘sell their product’. So, how would customers be confused or frustrated?
When Big Banks work with Brokers, their rates are almost always lower because of the volume discounts and cost efficiencies that Brokers provide. Brokers also generate more competition between the banks by shopping among them. So, if you walked into an RBC Branch, for example, and were offered 3% and then, called up a Broker who offered you the same RBC branded mortgage at 2.8% – this might be confusing or even frustrating to you. Hence the difference in names (ex. RBC and Merix Mortgage).
Also, with the un-advertised, lesser known lenders, the penalties to repay and discharge the mortgage are MUCH lower (in many cases by thousands of dollars) than when dealing directly with the Bank itself. Regarding penalty cost and other potentially costly features such as the ‘collateral mortgage’, it mainly comes down to how the fine print of the mortgage is worded. And Broker focused lenders are able to alter the fine print in the customers favour. This can make a huge difference in long term savings. Finally, un-advertised lenders like Merix work with Brokers closely, which means the customer gets to keep their long term Mortgage Broker partner, and continued long term savings.
Many clients like the idea of remaining with their Bank Branch, while lowering their rate with that Bank through the help of their Broker. While other individuals are more tuned into achieving the absolute lowest rate, and best terms available no matter what the company is called. Everyone is a bit different in their preferences, and their shopping strategies. A good Mortgage Broker is positioned well to accommodate most requests.