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When you’re ready to apply for a mortgage, you can go directly to a specific lender, or you can use a mortgage broker to help. If you choose to go the mortgage broker route, there are specific questions you should ask your mortgage broker to ensure you get the best deal based on your credentials.

In this article, we’ll go over some key questions to ask your mortgage broker. 

Key Points

  • A mortgage broker will expose you to dozens of available lenders and increase your options.
  • When deciding on which broker to work with, ask lots of questions to ensure you choose the right one.
  • Working with the right broker will help you get the right mortgage with the best terms and lowest rate.

Questions To Ask Your Mortgage Broker

When “interviewing” mortgage brokers, be sure to ask the following questions:

  1. Which Lender Is Best For My Financial Situation?
  2. What Interest Rate Will I Qualify For?
  3. Are There Origination Fees?
  4. What Are The “Hidden Costs”?
  5. Can You Provide Me With A Loan Estimate?
  6. How Large Should My Down Payment Be?
  7. Is A Fixed Rate The Best Option For Me?
  8. Is There A Penalty Fee For Prepayment?
  9. Can You Guarantee That My Closing Will Be On Time?

1. Which Lender Is Best For My Financial Situation?

Your mortgage broker will assess your finances before determining a suitable lender for you. All borrowers are different, many lenders will be best suited for some, not for others. 

Working with the lender that best fits your current financial situation, with the least amount of risk, should always be the number one priority of both you and your mortgage broker. You should feel comfortable and confident taking this loan, knowing it’s the right choice for you.

2. What Interest Rate Will I Qualify For?

The interest rate you qualify for will affect your overall cost of borrowing. If you’re able to qualify for a lower rate, you’ll end up saving thousands. On the other hand, the higher your rate, the more expensive your loan will be and potentially more difficult to manage.

3. Are There Origination Fees?

Occasionally, lenders will charge an origination fee. Ask your mortgage broker if you’re subject to these fees and how much it will cost. Also, consider asking if there is any way for the origination fee to be waived.

4. What Are The “Hidden Costs”?

There are many “hidden” fees associated with getting a mortgage. From loan origination fees to closing costs, it’s important to ask your mortgage broker about all the fees involved, so you can budget accordingly.

You should expect to pay a variety of fees, including but not limited to the following:

  • Appraisal fee
  • Credit pull fee
  • Land transfer fee
  • Lawyer and notary fees
  • Recording fees
  • Title registration
  • Home inspection
  • Taxes

5. Can You Provide Me With A Loan Estimate?

An estimate of all the fees you need to buy during the mortgage approval process is called a loan estimate, which your lender must provide. This amount, which includes all costs associated with your loan, will be provided when your application is finished. Ask about these fees if your mortgage broker doesn’t initiate the conversation, as these charges add up quickly.

6. How Large Should My Down Payment Be?

Make sure to consult your mortgage broker about how much you should put down for your house. Many first-time homebuyers believe that a larger down payment leads to a better mortgage rate, but this isn’t true. In reality, you can qualify for the same mortgage rate with as little as a 5% down payment compared to those who put down 20% or more. 

Your mortgage broker can offer valuable guidance on determining the right down payment amount based on your desired home and lifestyle.

7. Is A Fixed Rate The Best Option For Me?

Considering the constant fluctuation of interest rates in the market, it may be advantageous to lock your loan with a fixed interest rate. If you think interest rates may increase soon, solidifying your loan with a fixed interest rate is a smart way to keep your interest rate from increasing during your first term.

8. Is There A Penalty Fee For Prepayment?

A prepayment penalty is when your lender charges you a fee to pay off your mortgage earlier than originally agreed. This penalty exists because a lender counts on making a specific amount of money from that loan. If you pay a mortgage back sooner than planned, the borrower doesn’t make as much money from interest and therefore charges a fee.

Questions you can ask regarding the prepayment penalty are as follows:  

  • How much will the penalty be?
  • What are the terms of the prepayment?
  • Will I be charged the penalty if I refinance my mortgage later on?

9. Can You Guarantee That My Closing Will Be On Time?

You must ensure your mortgage broker can guarantee an on-time closing for your mortgage, especially for those who are under a strict timeline. If your lender is unable to close your mortgage on time, you may need to deal with extra expenses, for example:

  • Rescheduling movers
  • Finding a place to live while you wait to move

What Does A Mortgage Broker Do? 

A mortgage broker acts as an intermediary between a borrower and a lender. Their job is to compare the rates of all lending institutions, not only banks, to find the best mortgage for you. Mortgage brokers act as independent agents, whereby they research and communicate with different financial institutions to find the best option available. 

Think of brokers as a loan shopper, going store-to-store to find the best, most affordable option. By working with different institutes and using their contacts, mortgage brokers will research how and where you can find the best mortgage, with the lowest interest rate.

Benefits of Working With a Mortgage Broker

Several perks come with working with a mortgage broker that you may not get by going directly with a lender:

  • Faster results. Using a mortgage broker to compare loan products and rates is quicker and more thorough than tackling this process yourself.
  • Easier application process. With a mortgage broker, you only need to fill out one application to apply with several lenders. Your broker will submit them as required on your behalf.
  • Access to more options. Mortgage brokers work with dozens of lenders, which opens up your options. This is in stark contrast to dealing directly with one lender, who will offer you what they have in their limited arsenal of loan products.
  • Better payment terms. Brokers will work with you to determine a comfortable and realistic payment schedule that works with your current financial situation and budget.
  • Lower interest rates. Brokers will negotiate with lenders to get you the lowest interest rate and make your mortgage as affordable as possible.
  • Waived origination fees. Loan origination fees are often negotiable. Your broker may be able to get a fee waiver for you, which can save you even more money.

Can A Mortgage Broker Help You Find A Mortgage If You Have Bad Credit?

Some people work with mortgage brokers because they simply don’t have the means to find the information themselves.  Others work with mortgage brokers because of their bad credit scores. If you have a hard time getting a loan and don’t qualify with the banks, a mortgage broker can provide you with even more options due to their connections. 

How To Apply For A Mortgage With A Mortgage Broker In Canada

To apply for a mortgage with a broker in Canada, follow these steps:

Step 1: Look For A Mortgage Broker

If you’ve decided to work with a mortgage broker, begin your search for one. Many brokers are available on Canada. Just keep in mind that all brokers have different connections with different people. So, keep your options open and see where you can find the best deal for you.

Step 2: Get Pre-Approved

It’s highly recommended that you get pre-approved for a mortgage before you start searching for a home. During the pre-approval process, potential mortgage brokers will assess your finances to determine the maximum amount they’ll lend you and what interest they’ll charge you. A pre-approval will tell you how much of a loan you can get approved for, which will help you narrow down your options when searching for a home. 

Step 3: Ask The Right Questions

There are many questions to ask your mortgage broker. Make sure you have this list of questions handy when communicating with brokers to narrow down your options, including how to obtain the cheapest interest rate

Choosing The Right Mortgage Broker For You

Countless mortgage brokers can help you secure the mortgage you need to purchase the home of your dreams. This is why we can’t recommend enough that you choose a broker who you like and work well with. During the mortgage application process, you’ll be working closely with your broker, and a great broker can and will make all the difference.

Mortgage Broker FAQs

What do I need to provide my mortgage broker with?

Generally speaking, you’ll need to provide your broker with personal identification, proof of income and employment, proof of down payment, and a statement of assets and debts. Most of this information will be provided at the pre-approval stage.

How do mortgage brokers get paid?

Mortgage brokers are paid a commission from the lender you ultimately choose, so their services to borrowers are typically free.

Will my credit score be damaged by comparison shopping with so many lenders?

No. Only “hard checks” on your credit report pull your score down. These are done by prospective lenders when you formally apply for a mortgage. But starting the process with a mortgage broker and comparing loan offers won’t affect your credit score.

Should I check my credit score before working with a mortgage broker?

While a mortgage broker helps people with various financial and credit backgrounds find a mortgage, it’s always a good idea to check your credit score to understand where you stand as a borrower. You can find out what your credit score is for free by using Loans Canada’s CompareHub tool.

Note: Loans Canada does not arrange, underwrite or broker mortgages. We are a simple referral service

Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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