Mortgage brokers are the intermediary between a borrower and a lender. They compare the rates of all lending institutions to determine the best mortgage for you. These individuals are independent agents who research and communicate with different financial institutions to find the best and cheapest option suited to the client’s needs.

In other words, a mortgage broker shops around for you and negotiates on your behalf to get you the best deal, thus, making the experience easy and convenient by saving you money and time.

When you have decided upon the services of a broker to find you the perfect mortgage package, you need to be prepared to ask a few important questions to your broker.

What’s the importance of asking the following questions?

It’s recommended to assess if your broker is efficient at finding the right mortgage package for you. Hence, you need to ask a few pertinent questions.

1.Do I need to pay a fee for your services?

It’s important to note that the services of a mortgage broker are completely free. Generally, a mortgage broker is paid a finder’s fee for introducing you to a new client to a mortgage lender.

2. Can I get pre-approved for my mortgage?

It’s ideal that you are pre-approved for your mortgage. This will provide a clear idea on the amount you will be able to afford for expenditures on your property. Remember, this doesn’t automatically mean that you are guaranteed mortgage financing.

3. How long have you been in business? 

If your broker has been in business for a long number of years, you can be assured that he/she has good contacts and is efficient to remain in business. Even if your broker has just started out, you can still take a chance, provided he/she has the right qualifications.

4. Do you have references? 

You can ask your broker directly to present client testimonials or visit their website to gather the required information.

5. What lenders do you work with?

Brokers work with various lenders so that they can offer their client a wide choice. If your broker maintains relationships with limited lenders, it is more challenging to discover the best package in the market.

6. What type of mortgage should I consider?

Fixed and variable interest rate mortgages are the two most popular options. A fixed interest rate doesn’t change for the entire term of your mortgage whereas, a variable rate changes according to market interest rates.

Market fluctuations are dependent on various factors and your broker should bring to your attention the historical data to help you make an informed decision based on your situation and how risk-averse you are. Your broker should be able to guide you through this decision-making process.

7. How much do I need for a down payment?

Generally, first-time homebuyers assume they need to make a large down payment in order to get the best mortgage rate. In fact, you can pay as little as 5% (with some conditions applied) and still get the same mortgage rate as those who put down 20%. Your mortgage broker should be able to guide you on the down payment amount required to purchase the property. 

8. Can I pre-pay my mortgage? Will there be a penalty fine?

A pre-payment penalty is sometimes charged by some if you pay off your mortgage earlier than originally agreed. However, in recent days, most lenders allow clients to increase your regular payment and make lump sum payments. If you are favorable of pre-payment, a good broker should take this into consideration when shopping around to get you the best mortgage package.

9. How Much Time Do You Need to Fund?

You must include a closing date to write a purchase contract properly, so you’ll have to coordinate this date with your lender. Ask about the anticipated turnaround time. 

10. Are There Any Restrictions on Refinancing This Mortgage?

Ask your mortgage broker about any limitations of the mortgage before signing up and ensure that you read the fine print. Some mortgages come with lower rates in exchange for restrictions. For example, you may not be able to refinance your mortgage or switch lenders during your mortgage term. If that’s something you may want to consider, it may make sense to sign up for a mortgage with a slightly higher rate that gives you the freedom to refinance or switch lenders later on.

In conclusion, remember that you need to have a candid and clear discussion with your broker. Communication is key and ensuring alignment for both parties should be the baseline for any broker relation. It’s best to get all clarification from your broker and be clear on your requirements. By asking the right questions, you can help get the most out of the relationship with your mortgage broker.

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