A mortgage broker is better than a bank in the sense that a mortgage broker will help you with securing a better mortgage with a bank. You will have more lender options and a better understanding of the current market.

The services of a mortgage broker are completely free, most of the time. The only fees you may need to cover are the appraisal and legal fees. Usually a broker earns a finder’s fee for introducing you as a new client to a mortgage lender. Most lenders offer similar finder’s fees. That means you’re getting unbiased mortgage advice at no cost.

Before viewing properties, it’s a good idea to get pre-approved for a mortgage A mortgage pre-approval lets you know the maximum you can afford to spend on a home. You can get pre-approved for a mortgage through a mortgage broker. Your mortgage broker will take some detailed information about your income, credit and down payment, and give you a letter stating the mortgage amount you’re approved for.

You will also be given a mortgage rate that’s locked in for anywhere from 90 to 120 days to give you time to look for homes. If rates go down by the time you apply for your mortgage, you’ll get the better of the two. If rates go up, you will still be approved at your pre-approval rate. Once the mortgage application has been submitted, you should receive the initial approval in two to three business days. You can then complete the paperwork to secure the mortgage rate and term. The lender will then send legal instructions to your lawyer to start the legal work to help with the closing process.

With a fixed-rate mortgage, your mortgage rate and payment remain the same for your mortgage term. Fixed rate makes the most sense for first-time homebuyers and those who are risk averse, which is why I went with a fixed-rate mortgage when I was a first-timer. However, that stability comes at a cost. You’ll almost always pay a higher initial rate with fixed compared to variable. With variable rate, your mortgage rate and payment can change at any point during your mortgage term. When rates go down, your payment goes down, but when rates go up, your payment goes up. Variable does usually have a lower rate than fixed, but, before signing up, make sure you’re comfortable with the possibility of your rate going up some time in your mortgage term.

Always ask your mortgage broker how much your down payment should be. Most first-time house buyers assume the larger the down payment, the better mortgage rate you’ll receive. However, this is completely false, as you can give as little as 5% and still get the same mortgage rate as those who put down 20% or more. Your mortgage broker can provide insight and advice on just how much of a down payment is appropriate for the house you want to buy and the life you want to live.

While the term hidden might be a bit strong, there are in fact many fees associated with applying for and being approved for a mortgage. This is why it’s so important to ask your mortgage broker about every fee you’ll need to pay, this way you can budget accordingly.

Before viewing properties, consider knowing what your budget looks like and how much you can afford. This entails sharing your financial information with your Mortgage Broker, who comes up with a budget for you.

The most recent changes introduced a new mortgage qualifying rate for all uninsured and insured mortgage applications submitted on or after June 1, 2021. The minimum qualifying rate is based on either the benchmark rate of 5.25% or the rate offered by your lender plus 2% – whichever is higher.

Mortgage lenders will assess whether you can afford your mortgage payments on top of your car finance payments and any other debts, as well as your usual expenses. Lenders will also examine your credit rating carefully when you apply for a mortgage. Any missed car finance payments will appear on your credit score and could affect your mortgage application.

As B lenders are taking on more risk, their rates are approximately 1.25% – 2% higher than rates from A lenders. B lenders will usually charge a 1% lender fee as well. They are meant to be short term solutions, so the term length is usually only one or two years. The idea is to convert your mortgage to an A lender at significantly lower rates once your credit or income situation improves. Every situation is a little different however. There are always going to be situations where some may not qualify with either an A or a B lender. In these cases, private lenders are there to pick up the slack. Private lenders are generally (but not always) individuals looking to invest their money in mortgages. Rates are often between 7-8% on first mortgages, or 10-13% on 2nd mortgages. Private lenders will often charge a 1% fee, but in some situations the fee can be higher. While brokers get paid by A and B lenders, we don’t get paid anything by privates, which means there will be a fee from the broker as well. While private mortgages are the most expensive, they can bail people out of sticky situations without them needing to sell their homes.