Mike Cara

Why Choosing a Mortgage Broker Is About More Than Finding the Lowest Rate

When looking for a mortgage, one of the first questions many borrowers ask is:

“What's your best rate?”

It's an understandable question. Nobody wants to pay more interest than necessary.

But after more than 30 years in finance, I've learned that the lowest advertised mortgage rate doesn't necessarily mean the lowest-cost—or most appropriate—mortgage.

A Mortgage Is More Than an Interest Rate

Consider two lenders offering similar rates.

One mortgage might provide generous prepayment privileges, reasonable penalties and portability if you move.

Another could have more restrictive terms that become expensive if you sell, refinance or need to change the mortgage before maturity.

The interest rates may look almost identical.

The financial outcomes may not be.

When comparing mortgages, Ontario's mortgage regulator, FSRA, recommends looking at factors including the mortgage term, amortization, fixed or variable rate, prepayment privileges, portability, penalties and fees.

That's why I believe borrowers should shop for the mortgage, not simply the rate.

What Does a Mortgage Broker Actually Do?

A mortgage broker acts as an intermediary between borrowers and mortgage lenders.

Unlike dealing directly with a single financial institution, a mortgage brokerage may have access to multiple lenders and mortgage products.

That can be particularly valuable because every lender doesn't evaluate borrowers in exactly the same way.

A borrower might be:

• traditionally employed;
• self-employed;
• buying a first home;
• refinancing;
• purchasing an investment property;
• consolidating debt;
• rebuilding credit; or
• looking for an alternative mortgage solution.

The lender that works well for one borrower may be completely inappropriate for another.

The First Lender Matters

One of the most important parts of mortgage brokering happens before the application is submitted.

A broker needs to understand the complete application:

Income. Credit. Debt. Down payment. Property. Employment. Objectives.

Only then can the broker determine which lender or lending program may be appropriate.

Simply submitting the application everywhere isn't a strategy.

Selecting the appropriate lender from the beginning is.

Experience Becomes Particularly Important When Things Aren't Perfect

Straightforward mortgage applications are relatively easy.

The value of experience often becomes apparent when something isn't straightforward.

Perhaps you're self-employed and your taxable income doesn't accurately reflect the strength of your business.

Perhaps your credit was damaged by a temporary financial problem.

Maybe your bank declined your application.

Perhaps you're separating from your spouse and want to keep the family home.

Or maybe you're refinancing several high-interest debts into your home financing.

These aren't necessarily situations where the answer can be found on a mortgage-rate comparison page.

They require understanding the borrower's entire financial situation.

Ask Questions

When interviewing a mortgage broker, don't be afraid to ask:

• Why are you recommending this lender?
• What other options did you consider?
• What happens if I sell before maturity?
• What are my prepayment privileges?
• How is the penalty calculated?
• What fees could apply?
• Are there restrictions I should know about?
• What are the risks?
• How are you compensated?

Your mortgage professional should be able to explain the answers in plain language.

Mortgage Brokers Are Becoming More Popular

CMHC's 2024 Mortgage Consumer Survey found that mortgage-broker use increased from 43% in 2023 to 48% in 2024.

First-time homebuyers, refinancers, newcomers and consumers in Ontario and British Columbia were among those more likely to use mortgage brokers.

That doesn't mean everyone needs a broker.

It does demonstrate that many Canadians see value in having someone help them navigate lender and mortgage choices.

Looking for a Mortgage Broker in Peterborough?

Mike Cara brings more than 30 years of finance experience to helping homebuyers and homeowners understand their mortgage options.

Whether you're buying, renewing, refinancing, self-employed, consolidating debt or dealing with a mortgage situation that doesn't fit neatly into a bank's traditional lending guidelines, the objective is the same:

Understand the complete situation first. Then determine the mortgage strategy.

Because when you're financing hundreds of thousands of dollars, the question shouldn't only be:

“What's the lowest rate?”

A better question is:

“What's the right mortgage for me?”

Your mortgage advocate,

Mike Cara

Mortgage Broker in Peterborough and Central Ontario

705-775-7878