Reader’s Write: Mortgage Matters!

The guest posts begin this week with a “bank versus broker” look at mortgages.

You may think it’s highly biased because it’s written by my mortgage broker, but I happen to think every word is true…

Our many thanks to David Fleming for allowing us to be a guest blogger on TorontoRealtyBlog.com, as always we appreciate the trust and confidence David places in our Mortgage Team!

I love shopping at my local supermarket.  They have been my exclusive food provider for 10 years or more.  No produce philandering or comparison shopping for me.  No way, I am a one shop man.

Sure, from time to time they price gouge on some products.  They lure me to a false sense of security and use strategic placement marketing to take advantage of impulse buying.  Why do I continue to tolerate the pain of it all?  The answer lies here… “fear of loss is a greater motivator than the possibility of gain”.  I fear losing something (convenience, comfort?) and do not consider the prospects of gain (money savings, better products?) if I were to choose a new shopping experience.  What’s holding me back?

Wondering what a real estate blog has to do with a grocery store chain?  It is a great reference point and comparison to demonstrate how often a home buyer/owner opts for the comfort of their own bank to their own detriment.

Today’s guest blog…things you want to know about your bank but are afraid to ask!  Being a Mortgage Broker provides us with educational insight into the operations and processes of our illustrious “financial institutions”.

Clients thought they had approval from their bank…ultimately they had nothing!  Many times over the last year we have had clients referred to us that thought they had approvals from the bank and actually had nothing.  Some had completed applications, submitted documents, sat down with a representative of the bank and discussed the details of the approval and when the moment came to sign that offer…they had no financing at hand.  This has caused a significant amount of grief for clients and has ultimately brought them to our door to salvage transactions at the last minute.

The problem may be found in the difference between how the banks work on the approval process and how Mortgage Brokers address the process, systematically and strategically ensuring our client and their transaction are managed from beginning to a successful end.

One recent example in particular is worth noting (names have been withheld to protect the innocent…but call us and we’ll tell you which bank is having issues!)  Last Friday, we were asked to contact a client by the Real Estate agent working on the purchase of their new home.  The client had been assured one week prior that all was good to go by their bank manager.  Once the condition on financing was ready to be removed, the client did a final check with the same manager to discover that they indeed, did not have a true preapproval and that there was no financing in place.

Thinking this is just a fluke?  From our side of the desk, we see it on a weekly basis.  By using our vast network of lenders and our years of experience specializing only in mortgages (not worrying about selling you insurance, investments, chequing accounts), we were able to have the financing in place for the client same day.  There was no logical, reasonable explanation for the failure on the part of the bank.  They had been forgotten, slipped through the cracks in cyber space and left to scramble for a mortgage that should have been in place when they were told they were preapproved.

Why do we as consumers tolerate this type of service or lack thereof?  Going back to that same bank time and again, demonstrates that general dislike for change and the fear of loss issue.  Perhaps the next bank will be as bad or worse.  As human beings, we are creatures of habit, trying something new is very uncomfortable for most of us.  There is a phobia that may even address this…proper name…Neophobia.  As per the World English Dictionary: neophobia –n- a tendency to dislike anything new: fear of novelty.

We are never surprised when a new client comes to us because they have been let down by their own bank.  In many instances, this is not the first time this has happened over the course of their relationship.  What invokes the change finally? It’s the straw that broke the camel’s back; you raised my banking fees, increased the interest rate on my line of credit arbitrarily, lost money in my mutual fund account never thinking that I would leave you and go elsewhere.

The bank is counting on neophobia to keep me coming back!  From our perspective the bank delivers bales of straw to their clients on a daily basis.  Clients have barn loads of it and yet it is one small trivial detail that makes them turn away, ending the mental pain of being treated as a mere inconvenience in the machine that is big banking.

I am comfortable with my supermarket because it is familiar to me.  I am comfortable with my bank because it is familiar to me.  ‘New” just scares the proverbial p**p out of me.

There is an advantage to discovering something new, better service, less costs, limited aggravation.  Shake off the straw, move towards the possibility of gain and think about using the services of a Mortgage Broker the next time you require a mortgage.

The intent of this blog has not been for the sole purpose of blatant self-promotion but also to assure you that you, your friends, family and business associates have options and a Mortgage Broker is a viable alternative.

*Joe Sammut and Jody Price, Mortgage Brokers with Mortgage Architects, along with their team of mortgage professionals have been proudly serving the needs of clients of Bosley Real Estate Ltd since 2001.  Please feel free to contact us with any questions at joesammut@mortgagegate.ca or jodyprice@mortgagegate.ca or by phone at (888) 575-4403.  (Financial Services Commission of Ontario #10287)

7 Comments

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  1. I think most clients can expect personal and good service from a mortgage broker due to the fact that we are self employed and we need to close the deal in order to be compensated. Most of us love what we do and draw a lot of satisfaction from helping our clients – this is why a lot of people like us more than specialists at the branch.

  2. Generally I have seen that if we go to the bank for getting a mortgage then it takes more time than getting a mortgage with the help of real estate agents. Actually we have to do lots of formalities and paper works if we prefer mortgage from banks while a real estate agent can make it easy.

  3. El-mikeo says:

    I love how you felt it necessary to censor the word “poop.”

  4. Stip says:

    Great article. Full disclosure, I work for a bank and used a mortgage broker -despite my “employee discount,” my broker was able to get me a better rate than my life-long bank and now employer. No knock against banks, just that you owe it to yourself to look at this option. The beauty is there is nothing to lose. And the banks aren’t saying “hey, we have size and scale, we can beat anybody’s rates” there counting on the fact that you’re most likely to give them a call first. I also enjoy working with someone whose focus is mortgages -not other financial services, I find that my mortgage broker is much more in touch with the markets.

  5. George says:

    I did a mortgage switch recently, and my new bank took FOUR months to process the change. I repeatedly had to remind them to process the paperwork, coordinate with my original lender, etc. I even had to remind them to take money out of my account!

    I much preferred my experience with a broker. It was much less stressful.

  6. lui says:

    So true…Mortgage brokers are a pleasant step in buying a home..the worst has to be the bank own mortgage brokers or viewing your preconstruction condo for the first time and have it look like nothing like the stage showroom…..

  7. moonbeam! says:

    Bravo Joe Sammut, you have a terrific way with words and I totally agree with your points… I hate my bank. You also could’ve mentioned phone companies… but why ruin my morning coffee!

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