The Realtor - Mortgage Broker Team
It is very often that we see a Realtor offering the services of a mortgage broker that they are partnered and familiar with. This has become common practice and many buyers fall back on this convenient arrangement as the easiest, most accessible choice. Other buyers decide to go to an independent mortgage broker instead.
In this article we would like to address the benefits and downsides of working with the partner broker of your realtor as opposed to working with an independent.
Before we proceed, two things have to be clarified.
- You are in no way obligated to use the services of the preferred mortgage brokerage. The choice of mortgage broker is yours to make and yours alone. Making an educated choice increases your chances of getting a better deal, of course, and this is what this article is all about.
- Among the things that arise as “suspicious” when a realtor offers you to work with a certain broker, is that there is a “backstage arrangement”, also known as a “kickback”. The thing is that it is strictly illegal for a lender or a broker to offer a kickback (or gratuities, or any other form of compensation) to a realtor for referring a client to them. No respectable realtor or broker will risk their reputation and license for any such endeavor. The realtor, when suggesting a broker, has your interests in mind, and it is often a prudent strategy to follow.
Now that we have those two things out of the way, let’s answer the main question - what are the pros and cons of working with a suggested broker or lender?
Benefits
- A Realtor will likely pick and suggest a partner that they know and can trust. This will ensure that the deal goes through with all expedience and efficiency.
- When you are referred to a lender by your realtor, chances are you are pretty much pre-approved. It is very seldom that a realtor will refer you to a lender that will end up not granting you the funds. Again, you can rely on their reputation to be your surest guarantee.
- A Realtor will likely pick a partner that continuously offers competitive rates to please clients and help their own reputation stay on a steady rise.
- The Realtor and Mortgage partner are linked and their processes are known and streamlined. If anything goes wrong, you have two places to go to. If the lender is not meeting your needs, your Realtor will likely be able and willing to help negotiate any issues.
Downsides
- You are limited to one lender / broker. This is not a big downside, since you will have likely picked them after conducting some research of your own.
- There is a possibility that you will be missing out on better rates offered by the competition. This is a downside that is common to any lender or broker once you’ve chosen them. After all, once you work with one, you are not working with any of the rest.
- There is a chance to get stuck with two “bad apples” instead of just one. This hinges on you having to be able to trust your Realtor. If you can trust them, you can’t trust their referral as well. If you do, then there is no risk here, either.
- There is a chance that you will be missing out on builder-offered incentives, since those are often contingent on using their lenders. This is likely the only real downside here. Make sure you do your checking and see what’s available for you out there before you make this choice and you should be just fine.
With any more questions on mortgage rates in Montreal and other related topics, don’t hesitate to contact us. Best Mortgage Montreal is here for you.