Understanding Mortgage Brokers


The term "mortgage brokers" is most commonly used to describe the service of supplying financial arrangements for home owners. Brokers contact lending institutions in their network of associates to find the best terms and best interest rates for their clients, in return for commissions and fees.

However, there are many other situations where mortgage brokers are used. Businesses are clients of mortgage brokers too. Whether it is for start-up costs to acquire and equip the operation, or for an expansion of the business once it becomes established and wishing to move up to the next level, financing is sought that will achieve the required amount of money at the best deal possible.

Sometimes, however, the business may be experiencing cash flow difficulties and need an influx of capital. Small operations often find themselves in this predicament, where, in order to be competitive, they need to branch out into new products or services, but their profits are not enough to set aside regular amounts toward paying down their existing debt and operating expenses, and have enough capital to facilitate expansion plans at the same time. Mortgage brokers have access to many lenders who would be interested in providing low-interest loans to businesses, especially if they have a strong track record of profit in the past two or three years. Brokers will explain all the fees and charges that the loans will cost as well as getting the best interest rate. Up to date financial statements will be needed for the lender to study, as well as a business plan for the next five years, credit history and a record of a strong relationship with suppliers.

The lender will obtain and retain an interest in the property until the loan has been repaid, so collateral will consist of the building and yard as well as any stock. Business people wishing to enter a commercial mortgage should trust mortgage brokers who can determine who will be reasonable to deal with; too often a business defaults on its loan in a seasonal down-turn and the lender will pounce on the indiscretion immediately, forcing the business to foreclose. As well, there may be a redemption penalty to pay if the business makes enough profit that it wishes to pay off the loan early.

Whether it is an individual borrowing to purchase a house, or a business planning an expansion, mortgage brokers are invaluable in getting the best loan; at the best interest rate; with the least amount of fees and commissions. And using a broker instead of going directly to a bank saves money as brokers have lower overhead costs as compared to national financial institutions which are obliged to follow the rate sheets sent down by head office.

Brokers can also close a deal more quickly. They may get a good rate on a particular day and lock the loan in at that percentage point, with the rate rising by one or even two percentage points the next day. Banks rarely have such a fast turnover that can result in huge savings for the borrower, a factor that is important to a business where every moment is crucial. Any business looking to expand or consolidate debt would be well advised to consider using one of the mortgage brokers who will be happy to be part of the anticipated success.
Contact experienced mortgage brokers at First Foundation for your financing needs.
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