Friday, February 03, 2012

The Broker Value Proposition

Guest Blog by Dan Pultr, Director of Sales for British Columbia

On a recent ski trip to Whistler, a few of us started to discuss reasons why consumers should use a mortgage broker. We asked, “What is a mortgage broker’s value proposition?” 

The individuals I talked with knew about mortgage brokers and had used them in the past, but I don’t think they fully understood our value.  So I asked them this question. “Why did you use a mortgage broker?”  They said it was to get a lower rate and have someone shop the market for them. 

I then asked them, “If you had $500k to invest for the next 25-30 years, would you consult an investment professional?  So why not consult a mortgage professional, when you are borrowing $500k for the next 25-30 years? “

Let’s consider the rate debate. Mortgage brokers and banks sometimes switch places as to who can get you the lowest interest rate. While rate is an important factor when making a decision about a lender, more importantly is making sure you get the right product for your particular situation. A mortgage broker will explore those questions with you – your lifestyle plans, and your financial goals for example and will make sure you get a mortgage that fits. The wrong product can end up costing you thousands of dollars.

So what else can a mortgage broker do for you? Well, I’ve come up with the Power of Five:

1. A mortgage broker will babysit the transaction to make sure it goes smoothly so the client doesn’t lose sleep over it. It’s the mortgage broker who sweats the details.
2. A mortgage broker will answer all questions and address all concerns for the life of the mortgage
3. A mortgage broker works to ensure a client knows everything about their mortgage, their credit, and their budget.
4. A mortgage broker ensures that a mortgage matches a client’s specific needs and goals.
5. A mortgage broker works closely with respected lending institutions to ensure there are no issues with a client’s mortgage. If there is, they work to ensure any issues get resolved.

I want to mention one more concern expressed by the group I was with. Because a mortgage broker makes money from the transaction, they might not have the client’s best interest in mind. It’s true that brokers work are on commission and for that reason alone they want to make sure a client’s experience is a good one. If it isn’t, then clients won’t return and will not refer their friends and family members. A person who is on salary may not be fully vested in ensuring you are 100% satisfied your mortgage, but a person who is 100% on commission and builds their business from referrals sure is. 

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