Mississauga – Broker or Bank – what is the difference?

In Canada, people can use a Mortgage Broker, a Mortgage Agent or a bank employee usually known as a “Mortgage Development Officer” to get their mortgage in place.

As a consumer shopping for a mortgage, you may be asking, so what really are the differences between these ?   

Here is a table that I have created to help you compare:

 

	Mortgage Broker /   Mortgage Agent	Mortgage Development Officer who works for the Bank
Disclosure to Borrowers	The Mortgage Broker and Mortgage Agent are required to follow the disclosure stipulations per the Mortgage Brokers Act.   The Mortgage Broker and Mortgage Agent must inform the borrower about the mortgage transaction using a detailed document called the “Statement of Mortgage”.  The Statement of Mortgage contains details such as, legal description of the property, the loan amount, the term of the loan, the amortization period, the payment amount, the payment frequency, the total amount owing at the end of the mortgage term, the interest rate and a detailed breakdown of all other fees payable by the borrower, for example, broker fees or lender fees, etc. and the final effective cost of borrowing.   The Mortgage Broker and Mortgage Agent must provide a Statement of Mortgage to the borrower which shows what the effective annual interest rate is.	The Mortgage Development Officer is required to use disclosure documents that comply with the Bank Act.   The Mortgage Development Officer will provide details of the mortgage transaction to the borrower, however, the banks documents are not as “detailed” as the “Statement of Mortgage” document used by Mortgage Agents.                       The Mortgage Development Officer forms do not disclose the effective annual interest rate.
Disclosure to Investors	The Mortgage Broker and Mortgage Agents must provide detailed disclosure documents to the investor.  The investor is given adequate time to consider the investment opportunity before investing in the mortgage.	Mortgage Development Officers do not arrange financing with private lenders.
Product Offerings	Mortgage Brokers and Mortgage Agents are able to access the mortgage products of several lenders giving them access to various programs, lending options, and ability to shop and compare all of the mortgage rates available in the market.   Mortgage Brokers and Mortgage Agents can access financing through private lenders.	Mortgage Development Officers only have access to the products available with that particular bank.           Mortgage Development Officers do not arrange financing with private lenders.

 

 

This blog was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.  Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

 

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca 

or you visit her website at:    www.missmortgage.ca 

 

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

 

 

 

 

 

 

 

 

Mississauga – Pay off high interest debts

If you are already a home owner, you will likely have equity in your home.  Using that equity to pay off your consumer debts may be an option that will ease some of the stress of paying high interest debts over a long term.  Instead of paying your credit card debts at 18 – 28% interest, you may be able to consolidate that debt into your mortgage and pay it off at less than 6%.

 

Current Debt Position	Balance	Monthly Payment
1st Mortgage at 5.7 %  (amortization 19 years)	$220,000.00	$1,573.78
2nd Mortgage at 14%	$40,000.00	$469.55
Car Loan and Credit Cards	$18,857.00	$915.71
Total Mortgages + Car Loan + Credit Cards	$278,857.00	$2,959.04
New Debt Position	Balance	Payment
New Mortgage at 5.25% (amortization 19 years)	*$278,857.00	$1,926.60
2nd Mortgage at 14%	$0.00	$0.00
Car Loan and Credit Cards	$0.00	$0.00
Total Mortgage + Car Loan + Credit Cards	$278,857.00	$1.926.60
Total Monthly Saving:  $2,959.04 – $1,926.60 =		$1,032.44
*CMHC insurance fees and cancellation penalties may apply.  This example is illustrative only. Interest rates are subject to change without notice.

 

Consider above, a recent client with a mortgage balance of $220,000, a second mortgage at $40,000 and other debts totalling $18,857.  By consolidating the two mortgages, the car loan and the high interest credit cards, the client was able to reduce monthly payments and save $1,032.44 per month.  It is important to note that for this exercise to bear real financial fruit, this monthly saving should be applied to either an investment or as additional principal payments against the new mortgage.  All too often, the additional cash flow is consumed resulting in a similar crisis a few years down the road.

 

Such a consolidation will not only reduce monthly debt load but will improve and protect your credit rating, a major consideration for any Canadian seeking future loans.  Missed or late payments are not the only factors that can reduce your credit rating in the eyes of financial institutions, credit cards and lines of credit that are “maxed out” have the same negative impact.  You should always know, validate and protect your credit rating as much as your SIN number and credit cards.   When it comes time to renew your mortgage finance, you will be glad you kept your credit rating in good standing.

 

 

This blog was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.  Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

 

You can contact Elizabeth directly by phone at (905) 510-5785,  by email at eblair@mortgageedge.ca  or you visit her website at:    www.missmortgage.ca 

 

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca