Personal Finance

Mortgage Broker or on my own?

  • Last Updated:
  • Jan 21st, 2014 8:15 pm
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Feb 15, 2008
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ksgill wrote:
Jan 7th, 2014 8:29 pm
Are you speaking from experience that such lenders exist who will give you a mortgage for less than market rate?
Yup. I've seen this within families. "Grandma" has a bunch of money in GICs. Grand-daughter needs a mortgage. They go shopping, find the difference between the best rate from a mortgage broker, and the best rate possible from a GIC broker. Split the difference, and set it up with a security interest in the property (mortgage) pledged in favour of "Grandma". "Grandma" picks up an extra half-percent on her investment portfolio. Grand-daughter saves a bit of $$$ compared to a bank mortgage. Everyone's happy!

Some mortgage brokers even do the same, play both sides, as there are individuals who approach them with savings. It becomes beneficial for both the investor and saver because the mortgage broker is usually able to arrange a better rate because there's less overhead involved.
Seems like another pointless argument since you have never had a mortgage before. Such lenders, if they exist will actually charge you a higher rate of interest if anything.
Nope, not pointless at all. It also happens between RRSP trusts and individuals.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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FIVE34 wrote:
Jan 7th, 2014 8:59 pm
Hey Mark I talked to a mortgage broker today ..he said that CMHC does not protect any mortgages under one year old.
Mortgage broker doesn't know what he's talking about.
That means the lender is on the hook not CMHC if the borrower defaults, did you know this?
Its not true. Although certainly a loan that goes bad that quickly may be referred for a special examination for fraud or other systemic fault in the underwriting process. That may uncover misrepresentations or fraud in the application process, with consequences flowing accordingly.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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GonePostal wrote:
Jan 7th, 2014 9:04 pm
Feed the troll at your own risk.
Who's the troll? The OP was asking about funding options for buying a house. We're having a discussion of the potential sources of funding. I don't see how that's trolling at all.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Jr. Member
Dec 14, 2013
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Toronto
Mark77 wrote:
Jan 7th, 2014 9:03 pm
Mortgage broker doesn't know what he's talking about.



Its not true. Although certainly a loan that goes bad that quickly may be referred for a special examination for fraud or other systemic fault in the underwriting process. That may uncover misrepresentations or fraud in the application process, with consequences flowing accordingly.
Fine but not CMHC's responsibility either. Which is a good safety measure.
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FIVE34 wrote:
Jan 7th, 2014 9:07 pm
Fine but not CMHC's responsibility either. Which is a good safety measure.
Actually once the CMHC has written the insurance, and as long as the insurance policy itself is valid (ie: wasn't obtained fraudulently, the premium was paid, etc.), it takes effect immediately. There is no one-year waiting period to make a claim. Although that would be a great idea for future reform of the CMHC.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Dec 14, 2013
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Mark77 wrote:
Jan 7th, 2014 9:09 pm
Actually once the CMHC has written the insurance, and as long as the insurance policy itself is valid (ie: wasn't obtained fraudulently, the premium was paid, etc.), it takes effect immediately. There is no one-year waiting period to make a claim. Although that would be a great idea for future reform of the CMHC.
I was surprised when he told me too. I am seeing him tomorrow morning ill ask his sources of this info.
Jr. Member
Dec 14, 2013
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Mark77 wrote:
Jan 7th, 2014 9:03 pm
Mortgage broker doesn't know what he's talking about.



That may uncover misrepresentations or fraud in the application process, with consequences flowing accordingly.

Right but if something fraudulent is uncovered in the application process after the fact i don't think CMHC would be in effect as it violated the terms.
Deal Addict
Jul 11, 2010
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As usual Mark77 is off the mark with several of his comments, if not all of them. A credit worthy individual , ie employed, a beacon score of 650 or better with no late payments or proposals or bankruptcies will not pay a fee to a mortgage agent. The agent is paid by the lender. The lender is in the business to make money, to pay their staff etc so the commission will be built into the interest rate. You can transfer to another lender at the end of the term without paying a fee. That is why a person should not sign a renewal form without checking out what rate other lenders will offer them.

A person who has credit problems may be charged a fee if their application is difficult to place. They are higher risk to the lender and will usually pay a higher rate.

Mark talks about going out and finding a private lender and asking for a lower rate because the middlemen are cut out. These types of lenders are looking to maximze their profits not minimize them. These are private lenders who are willing to take a risk by lending to credit risk clients. They set the terms and one term is they will usually charge an upfront acceptance fee. The agent will not be paid the lender so the client pays them also.

As mentioned several times an agent will do the legwork and find you the lowest rate that fits your application.
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Jul 3, 2011
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Thornhill
Will you stop already! The OP is new to this, even seasoned buyers aren't equipped to negotiate mortgages and properly protect them selves with professional lenders and an unseasoned buyer certainly doesn't want to be a DIY with a novice lender either.

Besides, nothing in life comes without a price.
Mark77 wrote:
Jan 7th, 2014 6:40 pm
Either way, you're going to have to pay a commission. Whether you go with the in-bank-branch people (who need the commission to pay the mortgage sales staff), or a mortgage broker, who charges a commission. The only way you could really DIY the whole mortgage process is to find some people who want a secure investment, and borrow from them.
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Jan 11, 2004
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licenced wrote:
Jan 7th, 2014 11:50 pm
Will you stop already! The OP is new to this, even seasoned buyers aren't equipped to negotiate mortgages and properly protect them selves with professional lenders and an unseasoned buyer certainly doesn't want to be a DIY with a novice lender either.

Besides, nothing in life comes without a price.
I have to politely disagree with you, if by professional lenders you mean my grandma. She's a very trustworthy and honest lady, she would never try to take advantage of me!
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Jul 3, 2011
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I've heard of your GrandmaPostal.

I agree.

She's got a much better reputation than MaParker.
GonePostal wrote:
Jan 8th, 2014 12:12 am
I have to politely disagree with you, if by professional lenders you mean my grandma. She's a very trustworthy and honest lady, she would never try to take advantage of me!
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Mar 24, 2008
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Mark77 wrote:
Jan 7th, 2014 9:01 pm
Yup. I've seen this within families. "Grandma" has a bunch of money in GICs. Grand-daughter needs a mortgage. They go shopping, find the difference between the best rate from a mortgage broker, and the best rate possible from a GIC broker. Split the difference, and set it up with a security interest in the property (mortgage) pledged in favour of "Grandma". "Grandma" picks up an extra half-percent on her investment portfolio. Grand-daughter saves a bit of $$$ compared to a bank mortgage. Everyone's happy!

Nope, not pointless at all. It also happens between RRSP trusts and individuals.
I have seen examples where parents provide free money to their kids for buying houses. Are we comparing that to a mortgage? You can't be serious.
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Jan 6, 2011
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Mark77 wrote:
Jan 7th, 2014 9:01 pm
Yup. I've seen this within families. "Grandma" has a bunch of money in GICs. Grand-daughter needs a mortgage. They go shopping, find the difference between the best rate from a mortgage broker, and the best rate possible from a GIC broker. Split the difference, and set it up with a security interest in the property (mortgage) pledged in favour of "Grandma". "Grandma" picks up an extra half-percent on her investment portfolio. Grand-daughter saves a bit of $$$ compared to a bank mortgage. Everyone's happy!

Some mortgage brokers even do the same, play both sides, as there are individuals who approach them with savings. It becomes beneficial for both the investor and saver because the mortgage broker is usually able to arrange a better rate because there's less overhead involved.
I'd say that's a feasible if not a great idea, although I would say maybe cut out a portion of the total to be the second mortgage. Total amount might be too much risk for one granny along. Maybe get the other side of the granny to syndicate? :)

The negotiated rate is one thing, but the rules, admin/break fees, inflexible terms adds on top of the banker's salary/commissions. What's happening at a local credit union I used to volunteer for was the retirees hunts for yields while the 20 or 30 something couldn't get loan. So the banks steps in and become a clearing facility between the generations within a family. The same safety measure could have been done at a lawyer's office and payments tracked on Excel. On the flip side you'd have to consider the political risk of dealing with family members, most would rather pay outsider than dealing with own member, even for borrowing.

The whole idea would be based on sound fiscal discipline, otherwise it's just welfare transfer, from the poor to the poorer.

Personally I am looking at using HELOC on top of a closed variable rate to drop the total cost. I think it would be cheaper to get the same bank to underwrite the deal.
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