Are there hidden fees when dealing with a mortgage broker?
I come across this question every now and then…as a matter of fact I ran into somebody the other day who was refused a mortgage by the banks and when inquiring about going through a mortgage broker he was told by a “friend” that mortgage brokers are expensive and charge high fees.
So are there any hidden fees when dealing with a mortgage broker in Calgary or anywhere else and what are the fees.?
This is what Dave Alberda, mortgage broker at The Ultimate Mortgage Partners in Calgary had to say:
That’s actually a very common myth when it comes to mortgage brokers, and I do still run into that question from time to time. The interesting thing is that there are actually very rarely any fees associated when you deal with a mortgage broker.
There are times when they do come up, and that’s when we’re dealing with very specific lenders on very specific situations, but I can tell you that accounts for less than 1% of my business, okay? There’s certain times where you have to go to lenders where there is a fee involved and a higher interest rate, but the other 99% of the time we’re just going to the same banks that that client was likely into. I just know how to repackage the deal and get the mortgage approved at that bank or maybe it’s a different bank that has to get it approved at.
How mortgage brokers are getting paid
I am just an intermediary and I act as a broker between the two parties that being the client and the bank. How I get paid is a referral fee from the bank. It’s all part of the deal. The client never pays for it.
The bank just pays it directly to me as part of the cost of doing business which is less expensive for them to do than to have to pay advertising or for their employee to sit in the branch plus keep lights on and all those kinds of things.
So it’s kind of a far less referral overhead to pay us a referral fee to bring the business than for them to have to do all the other things, and it’s all just part of the deal. It’s never charged to the client.
Banks do NOT allow mortgage brokers to charge fees
As a matter of fact, when I deal with the big banks we’re not allowed to charge fees. Okay? If we get caught doing that, they’ll actually cut us off and no longer let us deal with them. So the short answer is very rarely is there ever any fees. When we’re dealing with the regular banks, there are no fees.
It cost you the same to go through the bank directly or through a mortgage broker
It’ll cost you the exact same to go through a mortgage broker as if you went to the bank directly, but then you have us in between negotiating for a better deal for you, making sure you’re getting the proper terms and conditions, that everything is explained to you properly, and most of the time I’ll actually end up saving the person money rather than it costing them more money, which never happens.
Contact Dave Alberda if you have any questions regarding getting a mortgage. Appointments are flexible and there is no obligation assumed.