Mortgage Basics #Real Estate

What is a Mortgage Broker?


Having a mortgage professional – whether that’s a mortgage broker, agent, associate or whatever they’re called in a specific province – looking out for your best interest while navigating the abundance of mortgage choices available today puts you at a huge advantage over shopping direct with one bank. Mortgage brokers ensure you always have the mortgage that’s best suited to your unique needs and finances – regardless of whether you’re a first-time home buyer, upgrading to a new home, renewing/refinancing an existing mortgage or buying an investment property or vacation home.

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Key Takeaways
  • A mortgage broker is a licensed professional who can negotiate the best mortgage for you by comparing all the offerings from multiple lenders, including banks, credit unions and trust companies, as well as alternative and private funding specialists
  • Mortgage brokers ensure you always have the mortgage that’s best suited to your unique needs and finances – regardless of whether you’re a first-time home buyer, upgrading to a new home, renewing/refinancing an existing mortgage or buying an investment property or vacation home
  • Mortgage broker licensing and requirements are enforced by provincial regulators

What is a mortgage broker?

A mortgage broker is a licensed professional who can negotiate the best mortgage for you by comparing all the offerings from multiple lenders, including banks, credit unions and trust companies, as well as alternative and private funding specialists. In other words, the mortgage broker acts as an intermediary between the borrower and the lender.

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Important

The term ‘mortgage broker’ doesn’t mean the same thing across Canada. While many licensed mortgage professionals can call themselves brokers in most provinces, the term is very specific in Ontario. In order to become a mortgage broker in Ontario, you must first be a mortgage agent. Becoming a broker means that, in addition to being an intermediary between mortgage borrowers and lenders, with additional education, a licensed broker can also act as a principal broker at a mortgage brokerage or supervise mortgage agents

What is a mortgage agent?

The titles mortgage ‘broker’ and mortgage ‘agent’ are often used interchangeably, although they mean different things. A mortgage agent acts as an intermediary between the mortgage borrower and lender, finding the best product and rate to meet the specific borrower’s needs. The distinction is particularly important in Ontario, because only a mortgage broker can also act as a principal broker for a mortgage brokerage and supervise mortgage agents.

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Tip

Banks and other lenders often try to convince mortgage borrowers that their branch employees or mobile mortgage specialists can provide the same products and services as licensed mortgage brokers. But, in reality, banks only offer their own products while brokers have access to multiple product lines from a variety of lenders

What does a mortgage broker do?

A mortgage broker acts as an intermediary between the mortgage borrower and lender, finding the best product and rate to meet the specific borrower’s needs. Exact terminology and duties differ across provinces. In Ontario, for instance, only a mortgage broker (not a mortgage agent) can also act as a principal broker for a mortgage brokerage and supervise mortgage agents.

Choosing a mortgage broker vs bank

The number one differentiator between banks and mortgage brokers is that mortgage brokers offer more choice. That’s because brokers have access to multiple product lines from a wide variety of lenders – including banks, credit unions, trust companies, alternative lenders, private funders, etc. 

 

In contrast, bank branches and specialists can only offer you a mortgage from their one product line. More choice from brokers means you’ll be matched with the best product and rate catered to your unique financial situation. And if you happen to be self-employed or have credit blemishes, brokers can still help you. 

 

Mortgage brokers also get lenders competing for your business again at renewal – or anytime you need to renegotiate your mortgage – which can save you a lot of money throughout the years as a mortgage holder. 

Mortgage broker regulations by province

Provincial regulatory bodies govern the real estate market in Canada. The Mortgage Brokers’ Regulatory Council of Canada (MBRCC) is comprised of regulators from across Canada responsible for administering mortgage broker legislation and regulating the industry in their respective jurisdictions. The MBRCC provides Canada’s mortgage broker regulators with a forum to work cooperatively, better share information and coordinate engagement of stakeholders to identify trends and develop solutions to common regulatory issues.

 

British Columbia Mortgage Brokers

The BC Financial Services Authority (BCFSA) licenses mortgage brokers in British Columbia. The Mortgage Brokers Act also requires private mortgage lenders who lend more than 10 mortgages a year to be licensed as a mortgage broker.

 

Alberta Mortgage Brokers

The Real Estate Council of Alberta (RECA) is the governing body for the real estate industry in Alberta, where anyone who solicits individuals to borrow or lend money secured by a mortgage, or negotiates a mortgage on behalf of another person, must hold a licence with RECA.

 

Saskatchewan Mortgage Brokers

The Financial and Consumer Affairs Authority of Saskatchewan regulates mortgage brokers and mortgage associates in Saskatchewan. Applicants need to meet both educational and experience requirements in order to become licensed.

 

Manitoba Mortgage Brokers

The Manitoba Financial Services Agency (MFSA) is a Special Operating Agency of the Province of Manitoba that administers and enforces legislation for the province’s securities and insurance sectors, real estate and mortgage brokers, credit unions, caisses populaires, co-operatives, and trust and loan companies. The Agency is comprised of The Manitoba Securities Commission (MSC) and Financial Institutions Regulation Branch (FIRB).

 

Ontario Mortgage Brokers

The Financial Services Regulatory Authority of Ontario (FSRA) regulates mortgage brokers and agents in Ontario. A FSRA licence is mandatory for mortgage brokers operating in Ontario. Their licensed name and licence number must be displayed on all marketing materials and advertisements. Private mortgage lenders don’t need to be licensed, but they can’t advertise to the public. Licensed mortgage brokers can advertise on their behalf. 

 

Quebec Mortgage Brokers

Mortgage brokers in Quebec are regulated by the Autorité des marchés financiers. Individuals need to pass four stages of certification before becoming a licensed mortgage broker. This includes mortgage broker training, training on professional practice and ethics, and related exams.

 

New Brunswick Mortgage Brokers

The Financial and Consumer Services Commission of New Brunswick regulates and licenses mortgage brokers and mortgage associates in New Brunswick. You must complete a specific education program in order to be licensed as a broker or associate.

 

Nova Scotia Mortgage Brokers

Mortgage brokers needs to complete the Regulatory Information Program as a requirement of their mortgage broker licence through the Government of Nova Scotia.

 

Newfoundland and Labrador Mortgage Brokers

Digital Government and Service NL is responsible for licensing real estate agents and handling and mediating complaints made against real estate agents and salespersons. In addition, Digital Government and Service NL handles and mediates complaints involving the actions of mortgage brokers and their staff.

 

Prince Edward Island Mortgage Brokers

Mortgage brokers in Prince Edward Island are licensed either as a Real Estate Agent or as a Designated Representative of an Agent. The Prince Edward Island Real Estate Association (PEIREA) plays a key role in establishing the professional standards of the industry, and ensuring PEI mortgage brokers have all the relevant education needed to serve local needs. 

Mortgage Broker FAQ

  • How do I become a mortgage broker? You must first become licensed by your provincial regulator. (See: ‘Mortgage broker regulations by province’ above.)
  • How much commission is paid to the mortgage brokerage? Mortgage broker commissions vary between banks and individual brokers, and typically range between 0.5% and 1.2% of your full mortgage amount. The exact percentage will also depend on the term and type of the mortgage. A percentage of the commission is taken off the top and paid to the mortgage brokerage before the broker receives their portion. This amount depends on the commission split a mortgage broker negotiates with their brokerage. 
  • How is a mobile mortgage specialist different from a broker? Mortgage brokers must be licensed and adhere to strict government rules and regulations. And, in order to maintain the licence, they’re required to take continuing education and relicensing courses to ensure they’re best able to advise on your ideal mortgage solutions. Mortgage specialists aren’t licensed. They can start working for a bank and begin selling mortgages with zero financial training or experience. Another key distinction is that branch and mobile specialists are bank employees, whereby mortgage brokers are independent business owners who don’t work for a specific lender. 
  • Can a mortgage broker help me if I have bad credit? Yes. Because mortgage brokers work with a large array of lenders, they have access to programs that fit the needs of people with varying degrees of blemished credit and can even help you repair your credit.
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