Is Your Mortgage Advisor Acting in Your Best Interest?
Buying a mortgage is one of the most important financial decisions we’ll ever make, which is why working with an experienced mortgage advisor is key. While a reputable mortgage advisor should make recommendations that benefit you most, not every advisor will.
Mortgage advisors follow a code of conduct outlined in the Mortgage Brokerages, Lenders and Administrators Act, which involves acting in your best interest.
It’s important to recognize the signs that your advisor may not be fully committed to helping you. In this article, we’ll help you understand how to spot a mortgage advisor that’s not working in your best interest.
What Does it Mean to Act in Your Best Interest?
A professional acting in your best interest means they’re doing their job in a way that prioritizes your interests, needs, goals, and values. Part of that means acting in your best interest, even if it isn’t going to benefit their professional goals, and even if it inconveniences them.
One example of a mortgage advisor not acting in your best interests is when they recommend a certain mortgage product ONLY because they will earn a commission from it. There are other options available that align more with your needs, but they choose that specific one because it benefits them financially. This is someone who is not acting in your best interest.
Mortgage Advisors Committed to Working in Your Best Interest
At GRFS, we’re dedicated to providing valuable mortgage advice that prioritizes your best interest above all else.
If you’re looking for an advisor that you can trust in Kitchener-Waterloo, let’s have a chat!
Signs Your Advisor Might Not Be Acting in Your Best Interest
1. Lack of Transparency
One major red flag is a lack of transparency about fees, commission structures, or the products being recommended. If your mortgage advisor is not sharing this information with you, they could have something to hide. A trustworthy advisor should provide clear explanations of all costs involved.
2. Pressure to Decide Quickly
A client-first advisor will encourage you to take the time you need to evaluate choices, because making decisions about your mortgage is not easy. If you feel like your advisor is pressuring you to make a decision quickly and in the moment, that’s definitely a red flag.
One reason an advisor might do this is because they’re recommending a mortgage product that benefits them but doesn’t align with your goals. They will try and get you to make a decision before you have the chance to consider whether that mortgage product is what you need or want.
3. Limited Options Presented
Be wary if your advisor consistently offers only a narrow range of mortgage options. A good mortgage advisor should present multiple lenders and products with no priority or favoritism.
4. Low Level of Communication
Regular communication is key in any advisory relationship. If your advisor is hard to reach or fails to keep you updated on important developments or changes, it might be a sign they aren’t invested in you as a client.
Questions You Should Be Asking Your Mortgage Advisor
But is there a way to know if a mortgage advisor is not acting in your best interest before you start working with them? Yes, it all depends on the questions you ask. Don’t be afraid to be straightforward and ask your mortgage advisor questions about their work and ethics. A reputable and trust-worthy advisor will be more than happy to answer any questions you have.
Here are some questions you should be asking your mortgage advisor before working with them:
“How do you get paid?”
This is one of the most revealing questions you can ask a mortgage advisor. Understanding their compensation structure can help identify conflicts of interests or unfair fees.
For example, do they earn commission on certain mortgage products? Which ones? Don’t be afraid to ask this question as a follow-up if they don’t clarify right away.
What options do you recommend and why?
Request a detailed explanation for their choices. A knowledgeable advisor should be able to provide rational and personalized reasons for their recommendations.
How many lenders do you work with?
A diverse range of lender partnerships often means better options. If your advisor works with only a few institutions, you’ll likely see limited options and miss out on favorable rates or terms.
What to Do If You Suspect a Conflict of Interest
Mortgage advisors are regulated by the Mortgage Brokerages, Lenders and Administrators Act to act in your best interest. If you suspect this is not the case, it’s important to take action.
If you sense a conflict of interest, here’s what you should do:
Communicate Your Concerns
First, let your mortgage advisor know about your concerns and why you feel that way. This gives your advisor the chance to clarify their intentions and be more transparent if needed, especially if there is a misunderstanding.
File a Complaint
If the issue is not solved after speaking to your mortgage advisor, and you continue to suspect they’re breaking code of conduct, you can file a complaint to the Financial Services Regulatory Authority of Ontario.