The Real Deal
Three mortgage and lending professionals set the record straight on common misconceptions people have about their industry
In a province where real estate is often the talk of the town and gaining access to all the latest information about property investment has never been easier, it may seem unlikely that misconceptions would persist about mortgages and lending; but that is precisely what the professionals in the industry continue to deal with on a daily basis.
Steve Blacklock, president of the British Columbia Association of the Appraisal Institute of Canada ( AIC), says the biggest misconception in his line of work is the discrepancy between what people believe their home to be worth, and its appraised value.
“Often it's lower, sometimes it's higher; and while this inevitably causes some owners disappointment, third-party appraisals are vital at a time when unscrupulous business practices such as mortgage fraud continue to occur, despite strict bank and government regulations.”
An independent market-value appraisal is the tool for everything from facilitating family law and estate settlements to securing construction financing. Blacklock refers to his colleagues as providing “sober second thought, and it's important for people to understand that our impartiality is to everyone's benefit. For example, if, in a marital divorce situation where one partner is `buying out' a 50 per cent share of the family home—one party will want the highest value and the other will want the lowest—in this situation, an independent appraisal can assist with a fair division of assets.”
As for advice to home owners or commercial property owners seeking appraisal services, Blacklock says, “Ensure you hire an AIC- designated appraiser who is knowledgeable and experienced with your particular property type and geographic market area. A helpful “Find An Appraiser” tool can be found at www.aicanada.ca.”
While it's not a misconception, exactly, Akash Sablok, past president of the Society of Notaries Public of B.C., points out that newcomers to this province may not be aware that notaries here enjoy a unique operational statute. “In other provinces, notaries are merely legal witnesses,” he says. “In B.C., they handle trust funds, review real estate and mortgage documentation and translate complex legal terms into language that everyone can understand.” In fact, over 60 per cent of residential real estate conveyances in this province are handled by notaries.
With about 340 notaries belonging to his society and growing steadily, Sablok says it's best for prospective clients involved in real estate matters to view notaries as “a liaison between the lender and the purchaser: we protect the interests of the former and make sure the latter understands all obligations. Our goal is for all parties to avoid the nasty surprises that frequently occur in any business transaction.”
As for mortgage brokers, Ajay Soni, national president of the Canadian Mortgage Brokers Association, would like prospective clients to know that mortgage brokers collectively fund over $70 billion in
mortgages in Canada annually, doing the legwork for buyers and shopping for the best deals—meaning, not necessarily the lowest rates, but mortgages whose terms are truly the best suited to their clients' financial situations.
“Many times mortgages with super-low rates come with stipulations that can wipe out the advantages,” he explains. “A good broker will protect a client against that.”
Soni points out that 55 per cent of first-time homebuyers rely on mortgage brokers “because first-time buyers value our services so much.”
In 2017, buyers may be aware that regulations regarding down payments have tightened, along with mortgage qualification rules.
“However, with our access to alternative lenders, we haven't seen a noticeable slowdown in business,” says Soni. “In fact, 2016 was a record year for brokers, and we think the market will be robust in 2017.”