It's worth it to work with a trusted mortgage broker

Tracy Head • November 21, 2022

Last week I ran into a situation with clients who didn’t understand what they were signing. The fallout has been expensive for them.

The clients are selling a home in Toronto and moving to the Okanagan for a well-deserved retirement. They both grew up in B.C. and knew they wanted to move back at some point. They came out for an exploratory trip and found a patio home in Osoyoos that checked all their boxes.


They wrote an offer with a fairly standard two-week financing subject clause but they did not add a clause to make the offer subject to the sale of their home in Toronto.


They went home to Toronto and lined up financing with their bank, including a provision for bridge financing in case the sale of their home did not close before their purchase was scheduled to close. They listed their home for sale the first day they were back in Toronto. Two weeks flew by with a few viewings but no offers on their home.


In the meantime, a backup offer came in on the home in Osoyoos. My clients still had six weeks before they were supposed to close on the new home. They asked their realtor in Ontario how likely it was that their home would sell in the next few weeks. He told them it would absolutely sell, no concerns whatsoever.


And he said even if it didn’t sell, their would be options for financing.


Based on their realtor’s confidence, they removed the subject to financing clause and went firm on their purchase in the Okanagan.

One week went by. Two weeks went by. Three weeks went by.


Fast forward to 10 days before closing on their new home. Crickets. Not so much as an offer, even a lowball offer, for them to consider.


They called their bank and asked what to do to line up alternative financing. The bank sent them to a broker in Ontario who reached out to me. Based on their circumstances and the tight turnaround time, their options were limited. Most private lenders prefer larger centres and many private lenders are tapped out right now as more and more clients have had to go the private route.


After an incredibly hectic and stressful week, the clients did complete the purchase on their new home.


I mentioned at the beginning of the story that this was an expensive journey for the clients. Due to the request being so last-minute, the private lender that did provide an approval and charged an extra fee for the rush. The lawyers charged almost double for the rush. The clients now have a $3,500 a month payment on the new home, plus the mortgage payment on their current home until the current home sells. At minimum, this cost the clients more than $40,000, an amount that could have been avoided.

Over the last few years, rolling the dice on selling a home would still have been a dicey move but odds were in the sellers’ favour that their home would sell, usually quickly and often with multiple offers.With the rapid increase in interest rates however, the market has definitely cooled, making this a very risky proposition.


In previous columns I’ve talked about investors choosing to walk away from properties, and risk being sued as they felt that would be less of a hit than moving forward with a purchase where the value of the property had dropped so much. In this case, I truly feel the clients did not understand the implications of their decision to go firm without a sale in the works.


If you are considering making a move now (or ever), I cannot stress enough the importance of working with a mortgage professional that you trust. Try your best to take the emotion out of the home-buying process and consider the possible consequences if you move forward without a firm sale in place.


There will always be other homes. Losing a significant chunk of the money you have worked hard for can really put a dent in your pocketbook.


Make sure you have someone who you trust to help guide you through the process.

Tracy Head

Mortgage Broker

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Mitigating Mortgage Moments

By Tracy Head • February 7, 2025
This week I had a panicked call from a realtor I work with on a regular basis. One of her sellers had a sale that looked like it was going to collapse. He was counting on the sale of that home for the down payment of his next home. She called mid-day Wednesday. The sale was supposed to complete on Friday. She asked if I could talk to the purchaser and potentially arrange financing for her. Before you read the next part, this is not intended to single out any particular bank or mortgage person. It could just as easily be a mortgage broker or a branch employee. The back story is that the purchaser had been working with a mortgage specialist from one of the chartered banks since mid-December. The specialist gave the client the go-ahead to remove her financing subject January 17th. The specialist then said they needed to extend the closing date by a week. Then by another week. Then she told the client she would have to come up with twenty per cent for her down payment. The client scrambled and came up with the additional money needed for her financing to be approved. I might not have believed this story except I did see the email chain. So what actually happened? My guess is that the mortgage specialist did not have an approval in place with the insurer or her bank when she gave the client the ok to remove her financing. The client had not seen nor signed any mortgage paperwork before removing her financing subject; she was trusting that her mortgage person had things well in hand being as she was told she was approved and things were fine. The buyer in this case is a first-time home buyer and did not know any different. I have pulled off the odd miracle in my days but I had serious doubts about being able to help this client in one day, especially being as she was buying in a smaller remote community so we had fewer options. We were working on her application and 6:00 pm Wednesday evening had word that the bank she was originally working with had come through and would be sending mortgage instructions to the lawyer the following morning (we are now at the day prior to closing). When you are purchasing a home and applying for mortgage financing, I feel it is so important to work with a team of professionals that have your back. As someone who has never bought a home before or maybe hasn’t done so in many years its important to do your homework and understand the process. If you think things are going sideways with your financing please make sure you ask questions to better understand what’s happening. If you have a feeling that something is really wrong, don’t wait until you have no other options. When you choose a mortgage professional to work with (and realtor for that matter) do a bit of homework. Ask your friends who they have used and what their experience was like.  Buying a home is stressful enough on a good day, but what this poor client has been through could have been avoided had she had a better idea of what the home-buying process was supposed to look like.

Private Lenders

By Tracy Head • January 24, 2025
The easy fix isn’t always the right fix. I’ve been wondering how long it would take to see the fallout as clients who have been paying really low interest rates come up for renewal. We have all experienced a steep increase in the cost of living. Even though rates now are sitting where most clients qualified with the stress test when they originally got their mortgages, for many people life has happened in the meantime. What do I mean by that? Often clients are having to push right to the top of what they qualify for just to get into the housing market. As we are going through the mortgage approval process we talk about keeping big consumer purchases (financing a car or furniture as an example) to a minimum as additional loan payments reduce borrowing power. Once clients are into a home life does indeed happen. The older car dies and a new car is necessary. Little ones come along and that can affect family income and add a daycare bill to the bottom line. Property taxes increase. Grocery prices skyrocket. You know the list. Balances start creeping up on credit cards or lines of credit. There are lots of different mortgage products to help with consolidation of debt. Lately the challenge has been that even if clients have significant equity in their homes with the increased interest rates they may not qualify with traditional lenders. Alternative lenders and private lenders come into play as options in this case. I’ll leave the alternative lenders to another day because I have a cautionary tale about private lenders. Not all private lenders are created equal. I have several that I work with when my clients need a solution in the private world. There is a time and a place where a private mortgage is the ideal fit. As long as you have an exit strategy (a plan as to how it will be paid out in a relatively short time frame ie: one year) this can be a great option for clients. Then there is the private lender that hurts my heart. Heavy catchy marketing bombards us from multiple venues. Their jingle is running through my head as I write this. For them the bottom line is that if you have adequate equity in your home you are approved. Cool. That fixes the immediate problem. However, more times than I like to think about, this lender creates far bigger problems for people. Despite the fact that you have equity in your home you still have to make the payments on these private mortgages. Interest rates are usually around the 14% mark so payments are high and you are not making any headway with paying down the mortgage. If there is no significant increase in your income you struggle and find yourself in a financial bind again. They set up another mortgage with an even higher rate. When you sign on for a private mortgage your are responsible for covering your legal fees, the lender’s legal fees, and there is also a lender fee that is included. Even a small private mortgage can end up costing almost $10,000 to put in place. If you couldn’t cover expenses with your first mortgage (at reasonable rates) guess what happens when you start adding in more and bigger payments on top of your normal expenses? For most people the only out at this point is selling their home. That is a very hard conversation for me to have with clients, especially when they’ve been in their home for many years. If you are finding that there is more month than money, sitting down and reviewing your expenses is the first step to take. Are there any areas that you are able to cut back? Do you have any options for increasing your income?  If the answer is no, talking to a mortgage professional sooner rather than later may help identify some options before you end up in a never-ending cycle of sleepless nights and missed payments.
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