At Auxilium Mortgage, we pride ourselves on our ability to match first-time home buyers with the mortgage that best fits their financial situation. As many of our clients aren’t yet well-versed in the mortgage application process and where mortgage brokers fit into the equation, it’s our job and honour to walk them through the steps and ensure they feel confident when purchasing their first home.
With that, one of the main questions we get from clients is about who pays for our services, and why you’d want to work with a mortgage broker in the first place versus simply going to a bank you have an existing relationship with. Let’s dive into the details to help provide some clarity about a mortgage broker’s role, and what that means for you as a home buyer.
Mortgage Brokers are Typically Paid by the Lender
When you work with a mortgage broker in British Columbia, in most cases you won’t pay anything out of pocket for their services. Instead, mortgage brokers are paid a commission or finder’s fee by the lender you decide to go with, paid out once your mortgage is finalized. This commission is usually a percentage of the total loan amount, and can vary slightly depending on the mortgage terms and the broker’s relationship with the specific lender. In BC, the amount of commission a mortgage broker can receive from a lender is regulated and disclosed, so you can always ask your broker and receive a clear, honest answer.
Are There Cases Where I Might Pay My Mortgage Broker Instead?
Typically, you won’t have to pay anything directly to your mortgage broker when they’re able to choose a traditional A-lender like a bank for your mortgage solution. Having said that, however, there are traditional lenders that don’t pay commissions directly to mortgage brokers and in those situations your mortgage broker would expect you to compensate them directly. Additionally, there are also some other types of lenders and situations where you might be charged a fee by your mortgage broker, often for alternative lending sources & solutions such as:
Private Mortgages: If you have less-than-stellar credit or don’t qualify with a traditional lender due to property type or other income issues, we can provide options for a mortgage with a private lender. In this case, broker fees are common and will be disclosed to you as part of the mortgage offer.
Alternative Lending: Generally, alternative B-lenders pay reduced commissions to mortgage brokers, therefore mortgage brokers may charge a top-up fee for the additional work and complexity that your individualized mortgage solution requires.
Commercial Mortgages: While most of our clients are purchasing residential homes, getting a commercial mortgage is a far more complex process that always involves fees, as commercial lenders seldom pay a referral fee due to the commercial nature of the transaction.
Why Should I Choose a Mortgage Broker Over a Bank?
We’ve discussed the benefits of choosing a mortgage broker over a bank in detail in a previous post, however the main points are as follows:
- We represent you, not the bank’s interest
- We work with a variety of lenders and types of lenders, meaning more options to choose from with less work on your behalf
- Education and advice throughout the entire process
- Streamlined application process when it comes to filling out paperwork and understanding which documents/proof of income are required
In short, working with a mortgage broker means that you have both an advocate and a guide, from application to funding to post funding!
Your Mortgage Broker is Your Advocate
While mortgage brokers do get paid a commission from lenders, it should be clarified that we as your mortgage broker work for you and your best interests. At Auxilium Mortgage, we’re known for our transparent process, understanding staff, and commitment to finding the best solution regardless of your financial situation. When you work with a mortgage broker, you can rest assured that we’re here to present you with all the options and make the mortgage application process smoother. Whether you’re looking to purchase your first home or refinance to better suit your financial needs, consider your mortgage broker’s office your home away from home. Ready to get started? Contact us today for a complimentary consultation.