• Mortgage Broker DisadvantagesMortgage Broker Disadvantages: Top 5 List

    At Robert Floris’ Mortgage Architects Office in Hamilton Ontario, we like to be completely transparent to educate our clients and help them make the best decision for themselves and their families; sometimes to our own detriment! The following is an honest list of Mortgage Broker Disadvantages; reasons NOT to use a mortgage broker when buying a home or refinancing.

    1. Trust

    Mortgage brokers work for mortgage brokerages like Mortgage Architects. But they are generally independent agents. They also answer to a government agency but because they are independent, it is hard to know whom to trust and whom to use. This is definitely one of the Mortgage Broker Disadvantages. It’s very difficult for us to stand out as trustworthy mortgage brokers in the sea of brokers online, which is why we hope that our Google reviews will at least give us a chance to earn your trust.

    2. Fees

    Some mortgage brokers will charge a fee for their service. This is called a “brokerage fee”. Beware of this fee! Generally speaking, when a mortgage broker places your mortgage with a “regular bank” (not a private lender), they are already getting paid a “finder’s fee”. The brokerage fee should be included in Mortgage Broker Disadvantages. The good news is that mortgage brokers are mandated by the Canadian government to disclose all of their fees up front. Please make sure you read the documents that you are signing and that you TRUST your broker to point them out! Note: never sign a blank disclosure form. Fraudulent brokers have been known to fill in these amounts AFTER the fact.

    3.   Inappropriate Lenders

    I know we are talking about Mortgage Broker Disadvantages, but this point can work for or against you. The advantage of using a mortgage broker is that they have access to way more lenders than a bank has which is, one. These multitude of banks each have their own niches in which they specialize, different terms, conditions, products, requirements etc. etc. So it is important that the mortgage broker chooses the right one that is best for you. This comes down to trust again but also, experience.

    4. Financial Overextension

    Because mortgage are independent and have access to so many more options than a bank, sometimes they can get you a mortgage even when you shouldn’t get one. We have tricks: private lenders, interest only payments, extended amortizations, lenders that will allow more debt than usual. This comes back to #1 again when considering Mortgage Broker Disadvantages. You want a broker that knows how to say no. There is no point in making a deal work if it is going to put too much financial strain on you and your family.

    5. Virtual Banks

    Last but not least, usually when clients are contemplating using a mortgage broker, our competition is the bank. When I say bank, I mean the bank on the street corner with a sign out front, doors, lighting, heating, tellers, greeters, tile floors, etc. That kind of bank. Any broker worth their salt will consider virtual banks when advising you. A virtual bank is one that you can’t physically walk into, but you can essentially do everything else with them. They specialize in mortgages only – and some credit products that use your home as security. Some people like the branch – they like to walk in and speak with a human being. You can speak with a human being at a virtual bank too – but it’s going to be on the phone. If the physical interaction is more important to you than the bottom line, make sure you tell your broker. They can usually do that too.

    I hope you’ve enjoyed my honesty and candor here! If you would like to discuss further, please don’t hesitate to contact me!

    Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

    If you would like to apply for a mortgage online, please follow this link.

    If you would like to see our Google reviews or leave one yourself, you can do so here.

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