Buying a home requires significant funds. In most cases, only a mortgage loan provides access to the necessary capital. In the past, borrowers had to visit different lenders one by one to find the offer that best suited their situation. This task is time-consuming, and understanding the conditions imposed by financial institutions also requires expertise in mortgage lending. Today, the involvement of a mortgage broker greatly simplifies the process for borrowers. What exactly are their responsibilities? Is it truly beneficial to use this professional? How much do they earn? Before answering these questions, it’s important to first distinguish this profession from that of a mortgage advisor to avoid any confusion.
Do Not Confuse a Mortgage Advisor with a Mortgage Broker
A mortgage advisor works for a bank. They will only present the mortgage solutions offered by their financial institution. When this professional is independent but still offers only the products of a single financial institution, they are referred to as a mortgage solicitor.
A mortgage broker, on the other hand, may be independent or affiliated with a mortgage brokerage firm. In either case, they work with several mortgage lenders and act as an intermediary between you and these financial institutions. They must also be able to tell you how many lenders they and their brokerage have worked with in the past 12 months. In that same period, they must inform you if any of the institutions they work with provided more than half of the total number of new mortgages or renewals.
The mortgage broker has thorough knowledge of the mortgage products offered by the financial institutions they collaborate with. Their primary goal is to find you a loan with an attractive interest rate that fits your financial situation and your project. If they believe your financial situation does not allow you to properly repay a mortgage loan, they may advise you against taking one.
This expert has a duty to guide you. They will take the time to explain how a mortgage works and clarify aspects such as the amortization period, the term, the maturity date, the interest rate, penalties, additional fees, insurance costs, etc.
Who Regulates Mortgage Brokers?
Although the mortgage brokerage profession has existed in Canada for a long time, its regulation is relatively recent. It was established on May 1, 2010. This profession was initially overseen by the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ) before coming under the authority of the Autorité des marchés financiers (AMF) in May 2020. These organizations aim to protect consumers from fraudulent lenders — individuals who use social media to entice clients with attractive mortgage or personal loan offers designed to steal sensitive information such as banking details.
To work as a mortgage broker, a professional must hold a valid license. This document protects you in the event of a dispute. Always ask for this proof or consult the Register of individuals authorized to practice to ensure you are dealing with a legitimate broker. Skilled fraudsters may claim to work for reputable institutions and even create websites that appear professional but are not hosted in the province they claim to operate in.
What Training Does a Mortgage Broker Receive?
To work as a mortgage broker, a candidate must complete specialized training recognized by the AMF, based on the curriculum of the Mortgage Brokerage Qualification Program (PQCH). Currently, this training is offered only by a few organizations such as Mortgage Professionals Canada.
It includes two modules:
The “Mortgage Brokerage” module allows the candidate to acquire foundational knowledge of mortgage brokerage, the different types of mortgages, and methods to assess client needs.
The “Ethics and Professional Practices” module aims to teach regulation and legal concepts related to mortgage brokerage.
After completing the training and having their application accepted, the aspiring broker must pass two exams. First, they must demonstrate ethical professional practice, then complete a brokerage transaction. A passed exam is valid for two years. If the candidate fails, they may retake it up to three times.
Once the exams are passed, the candidate must complete a 12-week internship working 28 hours per week to gain practical experience, deepen their knowledge, and develop professional skills.
If you are assisted by an intern during this probationary period, you are protected in case of damages they may cause. All cases they handle are covered by the employer’s liability insurance and the Financial Services Compensation Fund.
If the internship is successful, the candidate may apply for a representative certificate from the AMF before the exam validity expires.
What Services Does a Mortgage Broker Offer?
A mortgage broker provides several valuable services.
| Services | Description |
| Mortgage Pre-Approval Assistance | This process determines whether you are able to repay a loan and informs you of the maximum mortgage amount financial institutions may lend you. |
| Credit Advisory | The broker explains the details of mortgage loans and helps you improve your credit score and overall financial situation to increase your chances of obtaining a mortgage. |
| Mortgage Loan Comparison | The broker selects the loan products most aligned with your profile and expectations. |
| Negotiation of Loan Terms | The mortgage broker can negotiate more favorable lending conditions such as a lower interest rate. |
| Preparation and Management of the Mortgage Application | This professional helps gather the required documents for your mortgage application and submits it to the lender. |
| Renegotiation of Existing Mortgage Terms | If you already have a mortgage, the broker can negotiate better repayment conditions with your lender. |
Who Pays the Mortgage Broker?
The borrower does not pay the mortgage broker. They are compensated by the financial institution that grants the mortgage loan obtained through the broker’s involvement. Their commission depends on several factors including the lender, the mortgage type, and the number of completed transactions. The broker receives payment when the funds are released by the notary.
Two additional commissions may apply:
– Follow-up commission when the broker supports the borrower over an extended period.
– Renewal commission when the borrower renews their mortgage through them.
A broker may also charge fees if you violate the exclusivity clause. This clause prevents you from contracting another mortgage on your own or through another expert during the brokerage contract. Before signing anything, always ask whether such a clause exists. If you have questions, consult your broker or the OACIQ information center.
How Much Does a Mortgage Broker Cost?
A broker’s commission generally ranges from 0.5% to 1.2% of the borrowed capital. This percentage depends on factors such as the lender, the type of mortgage, its conditions, the term, and the broker’s experience and reputation. If the broker works for a firm, the firm takes a share of the commission — usually 5% to 25%.
What Are the Advantages of Working with a Mortgage Broker?
Working with a mortgage broker offers many benefits.
Save Money
A mortgage broker is a skilled negotiator able to secure better repayment terms such as a lower interest rate. Even a small reduction of 0.1% represents significant savings over the life of the mortgage. They can also negotiate your mortgage insurance. Additionally, you do not pay the broker — the lender does.
Save Time
Comparing lenders yourself takes several days. A broker manages this time-consuming task for you and uses their expertise to analyze available mortgage products and present the most relevant options.
Solutions Tailored to Your Situation
A mortgage broker understands the specifics of the products offered by their lenders. They can adapt their search to your financial profile and help you improve it to access better loan offers.