Broker: Don’t service yourself, service the client

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The deadline to submit deals before CMHC’s premium increase is quickly approaching, but that doesn’t mean brokers – and clients – should be worrying.

“We get multiple calls with clients asking how it will affect them and what they don’t realize is it’s just like rates: that five basis points that someone else is going to give you, what does that really equate to at the end of the day?” Geoff Lee of Dominion Lending Centres GLM Mortgage Group told “I think when you explain that and you really have your client’s best interest at mind, rather than push them into something they may or may not be ready for, or a property that they aren’t 100 per cent on … it’s really not servicing the client, it’s servicing the broker.”

CMHC announced in early April it will increase insurance premiums for those homeowners with less than 10 per cent down and players expect the move to impact one type of client in particular.

Effective June 1, the insurance premium will rise 45 basis points to 3.6 per cent for those mortgages with less than a 10 per cent down payment. The housing authority said the move, announced late last week, will only add about $5 per monthly payment.

“In order to be eligible for the current (lower) mortgage loan insurance premium your lender will need to submit a request for mortgage loan insurance to CMHC prior to June 1, 2015,” the Crown Corporation stated in its recently released fact sheet on the price change. “As is normal practice, complete borrower and property details must be submitted to CMHC when requesting mortgage loan insurance.”

And while many clients may be scrambling to purchase before the deadline, Lee has been advising some of them to hold off on purchasing until they are completely ready.

“Media does so many different things as far as putting the scare into people … and basically brokers will use that to push people into a transaction,” Lee said, noting it averages out to an extra $5 per month. “At the end of the day is it a deal breaker? No.” 
  • John Greenlee on 2015-05-22 9:41:41 AM

    I 100% agree on this level and many others. Always do what's best for the client and you in turn will benefit greatly.

  • Geoff Lee on 2015-05-22 1:53:32 PM

    I totally agree many people in our industry live for that commission and really disservice their clients in doing so and don't educate on the mortgage product and its "personalities" and how these types of product - No Frill Mortgages - will always come back and bite them and only try to sell the rate.....anyone just pushing a rate and not educating the client is a BIG RED FLAG and to be aware of

  • Ron Butler on 2015-05-22 2:53:59 PM

    I think it is a BIG RED FLAG that a broker would try scare tactics to push clients to a FULL COMMISSION higher rate product to line his pockets. What a crock.

  • Geoff Lee on 2015-05-22 2:59:42 PM

    I agree Ron...but typically when a broker is pushing the rate and not educating their clients on anything else within this mortgage is normally associated with a product that has restrictions that will benefit the lender and not the you are well aware the best mortgage product for any client is one with no restrictions, flexibility and the sharpest rate

  • Ron Butler on 2015-05-22 3:39:53 PM

    Totally disagree, tell the client the facts of all the products carefully, thoroughly and truthfully and let the client decide, do not self-servingly manipulate the client by telling them the "best " product is only the one with no restrictions, don't lie, don't state your opinion as fact. Give the client credit, tell the truth and let the client decide even if you make less commissions from that process.

  • Geoff Lee on 2015-05-22 3:45:48 PM

    I think you are missing my point is exactly what you are transparent, tell the client all the personalities of the mortgage - not just the rate - educate them in the pros and cons of the mortgage product(s) that you are presenting and let them make the final decision....the commission you earn is irrelevant as you are doing what is best for your client and not what is best for yourself

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