Mortgage broker

Since May 1, 2020, mortgage brokerage has been a discipline covered by the Act respecting the distribution of financial products and services and subject to the regulation of the  Autorité des Marchés Financiers (Financial Markets Authority) to ensure the protection of the public. Not only must every mortgage broker have professional liability insurance, they must respect the rules of ethics applicable to mortgage brokers.

Its role is to advise you, whether you are a buyer or owner, about the best mortgage products available on the market. He will do it better than anyone, because this task is not simple. It involves careful and methodical research, so that the winning conditions are met, and you can make the most of them.

A key person

A true intermediary between you and the lenders (financial institution or private lender), the mortgage broker will unearth the mortgage loan needed, after collecting the relevant information on your financial situation. Furthermore, using his knowledge of the mortgage market, he will be able to give sound advice at each step of the research process.

In fact, a is the right person to accompany you in your efforts to obtain a loan, whose interest rate will be variable, fixed or mixed. Repayment terms can also be adjusted, depending on what is best for you, i.e. every week, every two weeks or monthly.

If so, a mortgage broker may even recommend that a client not borrow if they feel that their financial situation would not allow them to meet their obligations, in the eyes of the lender.

A duty of advice

The mortgage broker is a guide, in a way, which must properly assess the various parameters of a mortgage financing. In particular, it should draw your attention to the characteristics of the loan:

A duty to be transparent

At all times, the mortgage broker must disclose to you in writing the number of lenders that made loans secured by immovable hypothec for which he engaged in a brokerage transaction in the previous 12 months. He must also tell you the name of the lender who, if any, has made more more than 50% of the total number of loans secured by immovable hypothec or loan renewals for which the mortgage broker, or the firm or independent partnership on behalf of which the mortgage broker acts, engaged in a brokerage transaction in the previous 12 months.

Compensation to the mortgage broker (brokerage fees)

The Act respecting the distribution of financial products and services does not address the amount that a mortgage broker can claim as compensation. It varies from broker to broker because it is an agreement that you have to negotiate together. The payment is usually paid by the lender concerned, in the form of a commission  (in the event that you get the loan). This commission is paid once the transaction is completed at the notary', and calculated according to the amount borrowed, as well as the term of the loan.

However, the mortgage broker may charge you a fee (at an hourly rate), pay a lump sum (predeter earnings) or a combination of these options, in which case they would have to notify you before you even mandate it. Remember that his remuneration or any other benefit must be disclosed to you, at all times, regardless of its nature.  

Exclusive brokerage contract (Warning!)

The contract you sign with the broker could be an exclusive brokerage. This type of contract provides a clause by which you give a broker the right to act as an exclusive intermediary to assist you. This is how you agree not to get a mortgage on your own or through someone other than the broker you are dealing with. If you circumvent the exclusivity clause, you may have a very expensive penalty to pay (for example, 1% of the loan amount you are looking for).

 WHAT YOU SHOULD KNOW! The mortgage broker is an intermediary that acts between his client and potential mortgage lenders. The latter are usually financial institutions or private lenders. The benefits of doing business with him are many: he knows the range of products available on the market, and he will find the loan that suits your needs and your financial situation, taking into account the interest rates and characteristics of the loan.

WHAT TO KEEP IN MIND : The mortgage broker must, prior to the provision of services, disclose in writing to the client his method of remuneration by indicating the fees requested for the services he renders, if any, and their due conditions, or the fact that he receives from the mortgage lender or anyone else a compensation or other benefit for the services he renders to him, if any.

 WARNING! The mortgage broker is required to respect the confidentiality of the personal information you provide to him. To share your information with a potential lender, or a credit officer, they must obtain your authorization. In addition, it is important to deal with a mortgage broker certified by the Financial Markets Authority. Check the Register of firms and individuals authorized to practise, from the Autorité des marchés financiers (Financial Markets Authority), to ensure that your mortgage broker has a licence to practice.

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