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The new reality of financial institutions

October 19 2017 by Multi-Prêts Hypothèques
What you'll learn
  • New financial reality

  • Criteria, conditions and mortgage rates

  • Virtual lenders

The financial world has grown by leaps and bounds over the past few decades. Lending institutions have rolled out an array of solutions to serve increasingly specific needs and previously ill-serviced market segments. Add the arrival of virtual lenders to the mix, operating without a physical branch, which we will explore further in this article.

For individuals, many benefits have arisen from this paradigmatic shift, namely mortgage financing solutions that are better adapted to individual needs, which can greatly vary from one person to the next.

But all lending institutions cannot excel in every niche, and satisfy every type of client. It can therefore be a challenge for an ordinary person, who doesn’t have a specific expertise in the matter, to make sense of it all at times. The incredible array of solutions offered and the rise of providers have both certainly contributed to the industry’s growing complexity.

In such a context, a mortgage broker undeniably becomes your most precious ally. We are also providing you with a few important reminders and clarifications surround today’s mortgage marketplace.

girl with piggy bank on her ear

Criteria, conditions and mortgage rates

Given that solutions have increasingly specific and distinctive characteristics, the rate is only one of many aspects to consider when making your decision. A mortgage with a good rate, but conditions that aren’t well adapted to your needs, may wind up costing you more in the long run. While keeping in mind the importance of lightening your financial load, a mortgage broker will recommend solutions that are truly suited to your needs. Find out more about mortgage conditions.

Each lender has their own decision-making grid when it comes to approving or refusing a loan. A borrower may not be accepted by one lender, but could fit another lender’s ideal client profile. In those cases, the broker is equipped to guide your request towards lenders that are more likely to provide a beneficial solution. You should also check out our article to find out more about the new mortgage rules.

homme popping out of a tablet with money

Virtual lenders

The mistake most borrowers make is not shopping around enough. If you have a good relationship with your bank or credit union, you may be tempted to have them handle all of your financial activity. While this may seem like the easiest solution, that is not necessarily the case. Not only may it wind up being potentially more expensive, but dealing with a mortgage broker can prove to be just as simple.

With a virtual lender, everything takes place without you having to set foot in a physical branch. Although the term “virtual” may be scary for those who are unfamiliar with these services, it is important to note that in many cases, these are established Canadian financial institutions that simply don’t have a physical address, such as First National Financial and MCAP. A few foreign institutions also use this business model, which allows them to considerably reduce their operating expenses.

These institutions offer a single discounted rate, while traditional lenders usually have a posted rate and a discounted rate. As such, penalty fees are much lower with a virtual lender.

A mortgage broker will prove even more useful in this case, as they are sometimes the only ones who can access these lending solutions. 

Key takeaways
  • Lending institutions have rolled out an array of solutions to serve increasingly specific needs and previously ill-serviced market segments.
  • The incredible array of solutions offered and the rise of providers have both certainly contributed to the industry’s growing complexity.
  • Given that solutions have increasingly specific and distinctive characteristics, the rate is only one of many aspects to consider when making your decision.
  • Virtual lenders are financial institutions that operate without physical branches. 
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