The mortgage brokerage industry has existed for decades, serving a crucial role in arranging financing for commercial and residential borrowers alike. While a surprisingly low percentage of investors and consumers have used the services of a mortgage broker, these experts of creative finance have served an important role in providing financial lubrication for the Canadian economy.

While their popularity has grown in recent years during the boom times of the last ten-years and the advent of extended amortizations and higher-risk products line 100% financing and interest-only mortgage loans, at no time are the services of a mortgage broker in higher demand than in tough times.

As part of a typical credit cycle, like all other types of supply and demand imbalances, the availability of too much liquidity (available capital or money supply) leads to a mismatch in the marketplace. When too much capital is available, investors are under pressure to lend to increasingly risky borrowers for ever-decreasing returns in order to be able to attract borrowers (demand). This “easy money” inevitably leads to loans being made to borrowers that should not have been approved, and thus previously stable and secure loan portfolios have risk pockets that begin to form.

When the cycle reaches its peak, typically some catalyst will set off a chain reaction of asset destruction and thus a resulting pull-back in available capital. This vacuum reverses the imbalance, and along with this reduction in available capital (supply) credit standards typically tighten.

In times of economic trouble, these reverberations can be intensified, and as is normal for markets, an over reaction to the situation leads to borrowers that should be able to qualify being shut out from obtaining bank mortgages. These borrowers include, but are not limited to, self-employed borrowers without income verification and those with equity in their homes but poor credit.

The end result? An increase in demand for alternative residential and commercial mortgage loans, almost exclusively arranged through a mortgage broker. Non-bank mortgage lenders are experts in providing financing for second mortgages, secured debt consolidation, home refinancing, and other types of non-conventional mortgage loans.

If you have been turned down by your local bank for a mortgage loan, you may want to consider speaking with an ethical and experienced mortgage broker that has substantial experience in tougher loans. Financial is available for mortgage and tax arrears,

For those without credit problems, the mortgage broker channel can provide discounted rates relative to the banks posted rates by as much as 1.75%, and the most reputable firms typically provide their service free of charge. Banks often take advantage of their loyal customers by providing non-competitive mortgages loans, and count on the fact that their borrowers will be too lazy to shop around their renewal offers.

Don't fall into the typical consumer trap. Make sure that you shop around on your bank to ensure that you are receiving a fair rate. At the end of the day, your banker isn't making your mortgage payment for you and they certainly aren't lending you the money for free.

Mortgage broker's can also provide advice, and strategies, that will assist you in paying off your mortgage decades sooner and can help save you hundreds of thousands of dollars over the lifetime of your loan, over and above the interest rate savings.

For a no fee mortgage consultation, contact the team at Canadian Mortgages (CMI) to see how they can help you beat the bank and save big today!