When getting a mortgage you have a fundamental choice, right to start with. You can go to a bank, or you can choose the services of a mortgage broker. It used to be that most people automatically went to their bank, but not so much anymore. In 2023 – 45% of purchasers used the services of a broker, and that number is climbing. With the economy the way it is and prices going up and wages not keeping up, the smart money wants to shop around. This is the main difference between a bank and a broker, but there are many others that you might just find refreshing.
It’s important to understand the differences between using a bank and a mortgage broker. Each option has its unique benefits and considerations, which can significantly impact your mortgage experience.
Banks vs. Mortgage Brokers
| Feature | Banks | Mortgage Brokers |
|---|---|---|
| Product Range | Limited to the bank’s own products | Access to a wide range of lenders and products |
| Interest Rates | Typically offer competitive rates but limited to their own | Can often secure lower rates by comparing multiple lenders |
| Service | Direct relationship with the bank; may offer perks for existing customers | Acts as an intermediary, providing personalized service and advice |
| Approval Process | May have stricter approval criteria; best for those with strong credit | More flexible, can find options for those with unique financial situations |
| Fees | No mortgage fees; may offer bundled services | No cost for mortgage broker services, advice or help; brokers are paid by lenders |
Benefits of Using a Mortgage Broker
- Access to Multiple Lenders: Mortgage brokers have relationships with various lenders, including major banks, smaller lenders, and private institutions. This access allows them to shop around for the best rates and terms tailored to your financial situation.
- Unbiased Advice: Brokers are not tied to any single lender and this enables them them to provide unbiased advice and recommend the best mortgage product for your needs. They are legally obligated to act in your best interest and to maintain strict confidentiality. Their job is to work with you and find you the best deal.
- Negotiation Power: Brokers often have strong relationships with lenders and can negotiate better rates than you might secure on your own. They may also offer mortgage buydowns by sharing part of their commission to lower your interest rate further. Our brokerage is part of the largest network in Canada, and our brokerage has achieved high sales volumes which mean even lower rates for our clients.
- Flexibility and Convenience: Brokers offer flexible meeting times and locations, often outside regular business hours, making the process more convenient for busy clients and our technology allows us to handle most transactions seamlessly by email – at your complete convenience. Naturally we love to meet face-to-face, but if you are busy, we will accommodate your life. You are the pilot in control, and we are your copilot.
- Specialized Expertise: Brokers specialize in mortgages all day everyday, and we can guide you through complex scenarios such as self-employment, bruised credit or how to renew or refinance to get better rates or to consolidate high interest debt. We can connect you with a host of different lenders – finding the one that might be more accommodating if there is any bumps to deal with.
- We also deal with Banks: Many are not aware that we also deal directly with some of the “big” banks! How’s that for variety? At the end of the day we will find you the best rate and terms for your current situation AND we will align the terms with your future goals. We don’t want to “just” help you today. We want you to be looked after tomorrow and be impressed enough to tell your friends and family. Only then have we succeeded.
Considerations When Choosing a Bank
- Familiarity and Trust: Many people prefer banks due to existing relationships and trust in these institutions. Banks can offer additional financial products like like overdraft, RRSPs and RESPs that brokers don’t.
- Bundled Services: Banks may provide perks like waived fees or special offers if you already hold accounts or other products with them.
Ultimately, whether you choose a bank or a broker depends on your individual needs, financial situation, and preferences. Brokers generally offer more flexibility and potential cost savings, while banks might be preferable for those who value established relationships and bundled services. If you have any questions, just ask!
