This advertisement in my alumni magazine caught my eye for a couple of reasons. First, it is actually a pretty good advertisement -- eye catching simplicity that made me stop and look at the jam jars wtih the different labels.
There are other interesting things about it though. If you read the fine print, you'll find that HLC is actually part of CIBC. That explains the dominance of CIBC affiliated brands on the jam jars... PC Financial and CIBC are the obvious ones, but First Line Mortgages is also part of CIBC.
HLC is providing some options that CIBC might hesitate to provide directly -- sales of products manufactured by other Financial Institutions.
Although the advertisement is about choice, this is not really what using a mortgage broker is about: it's about certainty. Choice is a euphemism in this context. The web site has language that captures the certainty issue much better:
There are specific financing solutions available if you are self-employed, experienced previous credit issues or bankruptcy or require financing on a non-traditional property.
You know that a broker is going to get you a deal, if there is one out there to be found, no matter how difficult your circumstances. And the broker is probably going to get you just about the best price you can get as well, even with their commission built in. The real bonus is not having to deal with a dozen financial institutions telling you that you have "a difficult file", giving you the pained expression, or any other patronizing, demeaning experience.
The broker's interests are almost perfectly aligned with yours: get you a good deal so they can get your business, earn a commission, and probably get a referral from you. Here's something you won't see at too many bank web sites: names, e-mail addresses and phone numbers for the mortgage broker people.
(I actually put something just like this on a financial institution web site last century: names and phone numbers of real contact people. It was amazingly successful. In fact, I personally used to get calls from all sorts of people who just hoped I could help them find the right person. And of course the commissioned sales team was happy to be easy to find. Back to our topic...)
Some mortgage brokers are so good at understanding the risk appetite and policies of the various lenders that they don't often get rejected -- they know how to package a deal so it can be done, and they send it to the right lender the first time.
We bought our last car this way -- a less common thing, but worked great. No sales person to deal with, no stupid negotiating game, and even with her commission tacked on, we got a better price than we likely could have by holding our breath till we turned blue.
You can buy many things this way, actually -- commercial printing, commercial financing, in fact most commodities, a house...
And the benefits are the same in each case. You get one knowledgeable player who does the legwork for you, thereby increasing certainty, reducing complexity, saving time and cutting back hassle significantly.
(Imagine trying to buy a house without a realtor and MLS ... driving around the city looking for signs, knocking on doors, reading ads in the newspaper -- what a nightmare!)
Intermediaries use their market knowledge and negotiating power to improve the customer experience, making a nice living while they are at it.