What is the difference between a Mortgage Broker & a Mortgage Specialist (hint – specialists work for the bank)!!
Kelly Hudson • July 13, 2018
With the importance of real estate in Canada, it is vital to understand how the various professionals in the sector operate when buying a home.
Sooooooo… what is the difference between a Mortgage Specialist & a Mortgage Broker?
On the surface they sound the same
- They both arrange mortgages
- They both can offer advice and help you select a mortgage, right?
WRONG!!! There are many differences… Let’s check some of them out!
- A Mortgage Broker works for you!
Their role is to act as a link between you and the lenders so that you do not have to spend your valuable time learning about mortgages and shopping around for the perfect mortgage. Mortgage brokers do the legwork and negotiate on your behalf for lenders. They are your point of contact for everything related to your financing your home.
- Bank specialists are employed and paid by the bank and work on the bank’s behalf.
- A Mortgage Broker can work with many different lenders
across Canada, rather than working for one financial institution. Therefore, Mortgage Brokers can offer you more choices with competitive rates and terms including: Big banks, Credit Unions, Trust Companies, Monoline Lenders (broker only banks), private lenders.
- Usually Mortgage Specialists only have access to their lender’s products. In a typical situation, homeowners could end up with a higher interest rate than other institutions. This occurs because the homeowner must negotiate for themselves and Mortgage Specialists are usually paid according to the rate they sell you.
- A Broker must successfully complete a Provincially regulated Mortgage Broker course and exam.
(
In BC, Mortgage Brokers must be licensed by
FICOM
) They continue to maintain their good status to keep that license by taking professional development education courses
- Bank specialists are not licensed and require no formal training. There are no standards for educational requirements (although most Lenders do provide some in-house training).
- Because Mortgage Brokers don’t work for a specific lender, you get impartial advice
about a variety of lenders
- A bank specialist can only offer their own institutions products, good or bad.
- Specialists don’t have access to other lenders, so they won’t recommend another lender’s product offerings.
- Mortgage Brokers use their knowledge and experience to negotiate the best possible terms and rates for you from a variety of lenders, based on the best fit for your situation.
- When you see a bank specialist, the mortgage negotiating is typically left up to you.
- Will the bank specialist negotiate on your behalf or the banks?
- For conventional financing, the services of a mortgager broker are generally FREE to you
. If there is a cost, you will be advised of those costs up front.
Brokers get a finder’s fee from the lender once they place your mortgage. Therefore, brokers are motivated to get the best terms and rates for their clients.
- Bank specialists are paid by the bank
- Some banks offer bonuses if specialist gets their client to pay higher interest rates or sign up for other bank services.
- Mortgage Broker’s work on a referral basis and are self employed. Most of their business is done through word of mouth referrals, therefore a Mortgage Broker is motivated to ensure their clients are extremely happy and satisfied to keep their business growing.
- A bank specialist is generally an employee of the bank, generating business through the bank’s existing customers.
-
- Most Mortgage Brokers are available for appointments outside banking hours (nights, weekends) at their client’s convenience.
- Bank specialists are generally only available during regular banking hours.
- Most Mortgage Brokers are available for appointments outside banking hours (nights, weekends) at their client’s convenience.
- Mortgage Brokers are focused on your mortgage
-
- Specialists are trained and rewarded on cross selling. Some will push you to consolidate all your banking services with them when getting a mortgage (credit cards, insurance, RRSP, lines of credit, etc.)
-
Would you ask Tim Hortons who makes the best coffee and expect them to say Starbucks? Not likely… So why would you ask a Mortgage Specialist who works for a bank, to tell you which Lender has the best mortgage product for your situation?
For additional information check out my BLOG Top 10 Reasons to Use an Independent Mortgage Broker
Mortgages are confusing… Give me a call and let’s discuss a mortgage that works for you (not the bank)!
Kelly Hudson
MORTGAGE ARCHITECTS
RECENT POSTS
Decisions relating to real estate can have significant financial and legal consequences. Before deciding how to share ownership of what is likely one of the largest investments of your life, I recommend consulting a real estate lawyer. Many Canadians purchase property together — including spouses, common-law partners, family members, friends, and business partners. Because ownership structure affects estate planning, taxes, creditor exposure, and control over the property, it’s important to understand your options before you sign. In Canadian property law, there are two primary forms of co-ownership: Joint Tenancy Tenancy in Common While these terms may sound similar, they have very different legal and financial effects — particularly if one owner dies, sells their interest, separates, or faces creditor claims.
If you’re 55 or older and own your home, chances are you’ve heard about reverse mortgages. Sometimes they’re described as a “retirement lifesaver.” Other times they sound risky or confusing. The truth? They’re neither magical nor terrible. They’re simply a financial tool — and like any tool, they work well in some situations and not so well in others – EDUCATION is the key! Let’s break it down in plain English. So… What Is a Reverse Mortgage? A reverse mortgage allows you to borrow money against the value of your home — without making monthly mortgage payments. Instead of you paying the lender every month, the interest gets added to the balance. The loan is typically repaid when: The home is sold You move out permanently Or you pass away In Canada, reverse mortgages are currently offered by: HomeEquity Bank (CHIP Reverse Mortgage) Equitable Bank Bloom Financial You still own your home and your name stays on title. That part often surprises people. How It Works (Simple Version) To qualify: You must be 55 or older You must own your home (you can still have a regular mortgage — it just needs to be paid out) You can usually borrow up to about 55% of your home’s value (the older you are, the more you may qualify for) You don’t make monthly payments. But you must continue to: Pay property taxes Keep home insurance in place Maintain the home The money you receive is tax-free. It can come as: A lump sum Monthly advances Or a combination of both That flexibility is one reason many retirees like this option. Why Do People Consider Reverse Mortgages? Most of the homeowners I speak with aren’t looking for luxury spending money. They’re trying to solve real life situations: Covering rising living costs Paying off debt before retirement Managing health or care expenses Staying in their home longer Helping adult children with a down payment For many Canadians, their house is their largest asset — but it doesn’t create monthly income. A reverse mortgage turns some of that home equity into usable cash. The Pros (The Reasons People Like Them) 1. No Monthly Mortgage Payments This is the big one. If you’re living on CPP and OAS, removing a monthly mortgage payment can dramatically reduce stress. Cash flow improves immediately. 2. You Can Stay in Your Home Most people I meet don’t want to move. They love their neighborhood. Their friends are nearby. Family visits often. A reverse mortgage can allow you to age in place instead of selling before you’re ready. 3. The Money Is Tax-Free Because it’s borrowed money — not income — it does not affect: Old Age Security (OAS) Guaranteed Income Supplement (GIS) That’s a major advantage compared to withdrawing from investments. There are no rules about spending. Some clients use the funds to stay in place – health care at home. Some clients renovate. Some travel. Some gift funds to children. Some simply create a safety cushion. It’s your equity – you decide. 5. You Keep Ownership The bank does not own your home. As long as you live in your home, maintain it, insure it, and pay property taxes — you own your home and can stay. 6. No Negative Equity Guarantee In Canada, reverse mortgages include protection so that you (or your estate) will never owe more than the home is worth — even if property values decline. That protection matters.
