When you are ready to start looking at buying a home, you will need to first determine who you will want to work with to get financed. Traditionally most people will use either a mortgage broker or a bank. Your parents probably dealt with a bank to buy their first home, but times are changing. Over 25 per cent of Canadians used a mortgage broker for their last transaction, and about 47 per cent of all first-time home buyers used a mortgage broker. Why has there been such a shift?

 

• First, mortgage brokering used to be primarily for "subprime" mortgages (individuals with poor credit or other unique circumstances). Since the 1990s, many major lenders including major banks and trust companies began to use mortgage brokers as an additional channel to fund their "prime" mortgages. Almost all Canadian banks have ties to the broker channel in some way, by either directly or indirectly funding mortgages.

 

• The other big shift that has occurred over the past five years is centralization. Gone are the days of relationship banking, where a bank will help you based on your relationship and length of time you have been with them.

 

• Now many banks base their lending criteria on quantifiable data, like income to debt ratios, credit ratings, etc.

 

• Fitting into your bank 's box is more difficult than ever before due to the credit crisis that began in 2008, and banks' boxes have shrunk considerably. Even if you do fit in their box, is their box appropriate for you?