It can be hard to tell who’s operating in your best interests these days, especially in Calgary’s tough real estate market. Property values are elevated, but still affordable, and residents continue to buy and sell homes at a higher than usual rate. The RBC Housing Affordability Measure recently reported affordability figures for Calgary indicating that the average family can expect to use about 38.7 per cent of their monthly income towards their mortgage for a detached bungalow. In comparison, the housing affordability measures for some of Canada’s other major cities are: Vancouver 82.3 per cent, Toronto 53.8 per cent and Edmonton 30.4 per cent.
We’re a city of well over a million people and growing, and our bedroom communities are densifying as well. The town of Okotoks recently lifted its population cap of 30,000, and High River is among the 15 fastest growing communities in Alberta.
While your real estate agent shows you houses, though, your mortgage broker or your bank gets you the money so that you can actually buy one. And there is fierce competition in that sector as well. The decision you make can have a far more serious effect on your long-term financial viability than whether or not you go urban or suburban.
It’s time to really break it down.
What’s better? A Mortgage Broker or a Banker?
Representing the heavy-weight favourite side of the equation are all the large banks out there. Working with a larger lender has its positive points. They boast longer hours than their smaller partners, several branches, 24-hour phone-in service, the ability to “bundle” your loans and more.
However, many banks have grown slow and inefficient through over-administration and endless service fees.
Mortgage brokers are the scrappy up-and-comer. They’re slowly chipping and jabbing away at the big-bank edifice, and are gaining respect from many admirers. They provide smart, fair service plus plenty of options. Mortgage brokers are generally small business owners who rely on personal references and referrals for a good deal of their client base, and therefore are willing to go the extra mile.
Ding! Renewal Time
In Calgary, late spring and early summertime is mortgage renewal time. The majority of real estate transactions happen before June, which is, after all, halfway through they year, and most home-buyers have the goal of relaxing and enjoying the summer in their new home.
Although mortgage rates have been rumoured to be about to rise any day now, they haven’t. They are still at historic lows, so it’s absolutely advisable to do some research. Your lender is required to send you a renewal notice at least 21 days before the end of your current term. About three months before that, start shopping. Since it’s more than likely you are not in the exact same financial situation you were in five or ten years ago, your mortgage shouldn’t stay the same either. Maybe you’ve just received a raise and are in a position to make higher payments. Or interest rates have changed. Or perhaps you’re simply curious. Whatever your reason, when renewal time comes around definitely take the time to compare your current lender’s offer with others.
Our Challengers Put Up Their Dukes
When it comes to renewing, if you have several accounts with the same bank, a benefit a large lender can provide is to complement your other financial products with your mortgage. At renewal time, ask if you are able to collapse a high-interest loan into your mortgage and consolidate debt. Also, if you have been with the same lender for several years you may be able to bargain a bit. The first offer isn’t always the best.
The Mortgage Brokers
At renewal time a mortgage broker can shop around among their lenders and present several options for your renewal. The time and effort it would take the layman to perform this kind of research takes a mortgage broker a few hours. There are many ways an average mortgage can be paid off – fixed or variable rates, open or closed – a mortgage broker will help you find the best solution so that you can reach your financial and life goals faster.
Most mortgage brokers work flexible hours, and are just as motivated as you to complete the mortgage planning process with due diligence. Brokers are usually paid by the lender, meaning that you typically will not pay any fees for their services. And provided there are no major complications with your mortgage, if you renew with a new lender they will generally process the application and take on any fees that may be applied.
Mortgage brokers have the edge for their agility, accessibility and options. Although they may be extremely nice, it’s unlikely your banker can be accessed through their personal social media accounts, cellphone and website at any time of the day.
But if you’re still not convinced, ask yourself these questions:
- Who is more likely to be there for me exactly when I need them? A banker or a broker?
- Who will work harder for me?
- Who can offer the most information on my real estate deal?
- Who will stay in touch?
Want to know what the bank isn’t telling you? Continue on to read the Top Ten Reasons to Use a Mortgage Broker.