What Options do Brokers Offer that Banks Don’t?

Brokers versus Lenders

A broker’s job is not just to provide a mortgage; it is to find the best possible mortgage for a client’s situation among multiple lenders.

A good broker will shop around between many different banks and credit unions to find the best mortgage product for the client. This is a fundamentally different service from banks or other lenders.

While a broker’s purpose is to find the best mortgage for a client, a bank’s purpose is to sell the client on the bank’s products.

Advantages of Going through a Broker

Mortgages are complicated affairs with many hidden costs. Many first-time home buyers choose mortgages strictly based on rates. However, they end up getting fleeced by fees, pay restrictions, and refinance policies.

This is especially true for people with variable income or bad credit, who need more flexible mortgage options. A broker can help find a mortgage product specifically designed for any needs.

Best of all, a mortgage broker has a good understanding of value, and can find the best new offers from a variety of lenders. Every time a new mortgage product is rolled out by a lender, brokers across the country analyze and evaluate its value for their clients.

Additional Options through a Broker

Specifically, the options provided by a broker, as opposed to a bank, include:

    Choice between different lenders
    Negotiation of rates with lenders
    Neutral consultations and assessments

Rising Popularity of Brokers

The recession may be over, but capital is still tight. Bank rates have continued to increase for the past few years. CRBC and TD in particular have both hiked their rates across the board. This has made homeownership very difficult for many Canadians.

The good news is that many brokers can still find the deals among the rising rates.

Lesser-known monolines, or dedicated mortgage lenders, have tried to gain an advantage over the big banks by providing lower rates. It’s difficult for laypeople to find the right monoline for them, but brokers have the skills to find monoclines with both lower rates and appropriate terms.

The public is noticing the better mortgages obtained by brokers. Brokers now account for about one third of new mortgages. Among people who have already gone through the mortgage process with a bank, most choose to refinance using a mortgage broker.

source: northwoodmortgage.com

Design: Lose the Combined "Investments & Insurance" Navigation Category

I spent many hours in November looking at how banks and credit unions position insurance offerings online (our report here). Many banks don't even mention insurance. And those that do often bury it under an "investments & insurance" tab. Wells Fargo is the most notable example.
While I understand the need to keep navigation choices to a manageable number, these two really shouldn't be lumped together. It's like Amazon having one tab for "Shoes and Goats." It's confusing for both the shoe buyer and goat shopper.

Although a number of investments contain an insurance component (e.g., annuities), for most shoppers, this is unclear. Usually investing comes first, so it's unlikely the auto insurance shopper is going to pay much attention to a navigation item beginning with "investments." That's the furthest thing from the mind of someone trying to save a few bucks to keep the family fleet running.

imageBottom line: If you are serious about selling insurance, it needs proper attention in website layout and navigation. Notice how Wescom Credit Union (Pasadena, CA) splits investments and insurance into two categories, with appropriate calls to action at the bottom of each column . The CU has some work to do on the landing page (it's cluttered and hard to find the quote I was promised), but it's still better than most.

source: netbanker.com