2020 was a record year for residential home sales in Canada. According to the Canadian Real Estate Association, there were 551,000 recorded transactions over all Canadian MLS systems. So far, the country is on track to outpace that number in 2021.
With housing markets hotter than ever and prices expected to continue rising in 2021, making the right choice when it comes to financing the purchase of a property has never been more important. In partnership with the Angela Calla Mortgage Team, we take a closer look at why you should consider using a mortgage broker, whether you’re a first-time or repeat homebuyer.
The power of choice between mortgage products
Jordon Hope was a frequent listener of Calla’s The Mortgage Show radio program when he was getting ready to purchase his first condo several years ago. Rather than spend time shopping around at several different banks and potentially lowering his credit score with each institution’s inquiry, he reached out to the Angela Calla Mortgage Team to arrange financing. Since then, Hope has married and started a family, purchased a house and invested in a vacation home. He credits his purchasing power to Calla and her team.
“I was able to choose how to structure my mortgage,” Hope says. “And then they would always follow up on the anniversary of my mortgage to make sure that we had everything we needed. In that, there would always be a conversation about opportunities in the market, whether rates were rising or falling, and what would be a good play.”
According to Calla, who’s a broker with Dominion Lending Centres based in Port Coquitlam, B.C., having that plan and following up on it is an important distinction between banks and an independent broker. Since bank brokers work for the bank, she says, they usually have their company’s bottom line in mind. Independent brokers, however, work for the client and advocate for their best interests.
“It’s the power of choice with unbiased advice,” Calla says. “Mortgage brokers are independently licensed. They get compensated regardless of where they place the mortgage. Our only goal is to advocate for the borrower and create a borrowing strategy that’s going to help them build and protect their wealth as they go through the home ownership journey.”
Calla notes that shopping around for a rate yourself can not only lower your credit rating and impact the rates available to you, but can also cause a red flag for fraud when lenders see multiple applications come across their desks. “Utilizing the services of a mortgage broker protects your credit, and you can shop multiple lenders without any negative impact to your credit,” she adds.
Getting a personal touch from a mortgage broker team
Liz Halloran and her husband, Kevin, were also familiar with Calla’s team from the radio, but they didn’t reach out for personal advice until they were newly retired and had their first of two mortgages coming due. Not only were Calla and her team able to consolidate the mortgages (along with a line of credit and other various debts), but the team also lowered their overall monthly payments by more than $2,000.
“Up until the day that it went to the lender, they kept emailing us and saying the rate had gone down,” Halloran recalls. “It must have gone down at least three times before everything was signed. What they were able to put together for us was amazing.”
Both Halloran and Hope add that during the actual process of finalizing their mortgages, it didn’t matter who they contacted with questions. “It was a great team,” Halloran says. “Everybody seemed to know exactly what was going on.”
Factoring in more than a mortgage rate
Calla says that customers don’t need to be experts when shopping for a mortgage, but they do need to consider more than just the rate that’s being offered. The conversation should also cover penalties, pre-payment terms and options, amortization schedules, and how much of the principal balance is being paid down with each payment.
“It doesn’t matter what rate a bank comes back to you with. If they give you restrictions on paying down your mortgage, then you’re going to have a mortgage longer with them,” she says. “If you have a good mortgage broker, it’s like a doctor’s practice. We work on keeping people healthy, we work on keeping mortgage borrowers the wealthiest they can be by proactively reaching out to them. When there’s a change either in the market or with policy, or potentially in their lifestyle, we ensure that they’re only getting the best rate and product.”
Calla’s team, for example, is currently reaching out to clients whose mortgage rates are higher than 2.7 per cent, because they may be able to get a lower rate right now. She points out that loan officers at a bank have a mandate to sell products, not to help customers save money.
“They are employed by the bank to make the most amount of money for the bank. Doing that means you’re not doing the best for yourself,” she says. “The only purpose of a mortgage broker is to get you the lowest cost of borrowing.”
Have questions about your mortgage? Thinking of buying a new house? Visit the Angela Calla Mortgage Team online to learn more about how a mortgage broker can help.