A common question that I am asked is “why should I choose to use a mortgage broker?” “Can’t I just walk into a bank and get a mortgage?” The truth is there are several advantages to using a mortgage broker rather than walking into a bank.

•SAVE MONEY – Using a mortgage broker will get you a competitive mortgage rate that will save you money in interest payments. Banks generally do not offer you their best rates at first (you have to negotiate with them) and they generally do not offer the best rates in the market. With a mortgage broker there is no need to negotiate. Also brokers have access to several different lenders, so you can be assured you are with the lender that is offering the best rate in the market.

•SAVE TIME – The mortgage broker will do all the work for you. Mortgage brokers have extensive knowledge, so there is no need for you to do any research. Mortgage brokers talk to all the lenders on your behalf, so they is no need for you to do any “rate shopping”. Mortgage brokers do the negotiating and take care of all the paperwork for you. Mortgage brokers save you hours of work, so you can spend time with your family and friends.

•GET A MORTGAGE – Banks offer mortgages to only one particular client; clients with excellent income and excellent credit. For individuals with poorer income (or who are self-employed), it may not be possible to get a mortgage from the bank. Also if you have credit issues (because of a divorce, identity theft, or landed in a tough time) banks will simply turn their back on you. A good mortgage broker will never turn their back on you. A mortgage broker is your solution to finding the right mortgage product for your home.

Next time you need a mortgage for a purchase, refinance or renewal, call a mortgage broker and see the difference for yourself.

Posted by Kevin Somnauth, CFA
First Toronto Mortgage (http://firsttorontomortgage.com)

There will be two major impacts in the mortgage industry in 2011. First, the obvious, mortgage rates will continue. Second, it is predicted that the government will continue to implement stricter mortgage lending guidelines.

In 2010, 5-year fixed rates were at 3.29% and Prime rate remained at 2.25%. Since then, the Bank of Canada increased their posted rate 5-year rate to 5.49% and Prime rate increased to 3.00%. With bond yields rising and short term interest rates predicted to raise as well, fixed and variable mortgage rates will continue to increase in 2011.

In 2010 the government implemented lending rules that made it tougher to get a mortgage. Borrowers had to qualify at the Bank of Canada’s posted rate, had to put 20% for investment properties, and had to put 10% if they were self-employed. This made it tougher for people to obtain home financing. In 2011 the government has hinted that stricter regulations will be implemented, making it even harder for people to get approved for a mortgage.

Posted by Kevin Somnauth, CFA
First Toronto Mortgage (http://firsttorontomortgage.com)