Saving A Fortune for Canadians: Part 2 of 5

Would you like to save a couple of thousand dollars when you buy your next home? If you don’t, don’t feel shy about letting me know by sending me a PayPal transfer. If you do, read on.

Let’s assume you are about to buy your dream place. And, like most Canadians, you’re taking a mortgage, for which you turn to a mortgage broker. In Toronto, average home prices are at the million-dollar mark, and thus we’ll assume a mortgage of some seven hundred thousand dollars.

For the remarkably few hours that your mortgage broker gives to your file, that person takes as a fee anything between 0.8% and 1.1% of the total mortgage. For a typical home, with a sensible mortgage, that’s a fee of between $5,600 and $7,700 …. for not a lot of work. True, the broker charges that amount from the lender … which in turn, as it happens, charges you.

In the big picture, it might not seem a lot … but that’s a month’s salary for most of us. Can you negotiate a couple of thousand dollars back from the broker? There’s room for sure given that another broker somewhere else is going to want your business. It’s not as if there’s much to differentiate what brokers can offer – there are very few tier one lenders out there.

I’d rather save on that post-tax money than leave it on the table.