How using a mortgage broker reduces your rate by 17.5 basis points

January 30, 2017 | By | 2 Comments

How working with a Toronto mortgage broker saves money | | Ingrid Bjel McGaughey | Toronto Mortgage BrokerMortgage brokers drive mortgage rates down

A 2011 Bank of Canada study said that “the average impact of a mortgage broker is to reduce rates by 17.5 basis points.”  In fact, controlling for certain variables such as borrower income, they actually found that “borrowers using a broker got a discount of approximately 32 basis points.” (See the study here, pages 27-30). Want to know how using a mortgage broker reduces your rate?

Why does using a mortgage broker save you money?

Simple. It’s competition. Just like when you shop for a car, and the first dealer gives you their “best” price, the next dealer, knowing that you’ve been elsewhere, gives you a slightly better price. Then the fun begins. You go back to the first dealer, and magically, you get a new, even better, “best” price. You can go back and forth between them several times before you really get to the last, lowest, price.

Similarly, you can get your mortgage rate down, by going through the effort of bank branch to bank branch, and checking online, and putting in a lot of effort. If you use a mortgage broker, we do the mortgage rate shopping for you. We deal with dozens of lenders. Lenders know that when they’re dealing with a mortgage broker, the competition is built in. They know they need to give the best rate from the beginning. As the Bank of Canada researchers concluded, “brokers are a significant factor in driving discounts.”

Is there a hidden cost with using a mortgage broker?

The short answer:  Nope. The long answer:  Mortgage brokers are typically paid by the lender, not by you, the borrower. If it turns out that your financial situation is best served by an alternative lender, or a private lender, any fees, if applicable would be discussed up front. Clients of mine are NEVER surprised with a hidden mortgage broker fee. 

Is mortgage rate discounting the only benefit of a broker?

There’s more!

In putting together your mortgage plan, I consider your full financial picture. Together, we’ll discuss your financial goals, job situation, personal plans. I’ll explain fixed versus variable rate mortgage options, pre-payment privileges that you might want to take advantage of, and the types of lenders you’re most comfortable with. We’ll look at the effects of timing on your home purchase, and the impact of increasing or decreasing your down payment. I want you to feel totally confident in the mortgage decisions you make, and to give you the tools to make informed mortgage choices.

Get a free assessment of your mortgage readiness

Want to know more about your mortgage options? Get in touch with me for a free, no obligation assessment. I’d be happy to help.


Photo credit: [c] andresr for iStock






Filed in: About Mortgage Brokers, First Time Homebuyer, Mortgage Planning | Tags: , , ,

About the Author (Author Profile)

I'm a Toronto Mortgage Broker. My focus is on saving people time and money in financing and re-financing their homes. Am passionate about helping people make informed choices, giving back, and helping to improve financial literacy in Canada.

Comments (2)

  1. kristina

    Hi there
    We are interested in purchasing a second property and are trying to figure out process? What would our financial options be? Would love to discuss this further with you if possible?

    • Hi Kristina, thanks for getting in touch. I’d be happy to discuss your options – will contact you off-line. Or, you can feel free to call me at 647-283-6765.


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