Mortgage Broker Vs Bank Pros And Cons

So, you’ve decided to get a mortgage. The next crucial issue is where and how to obtain a mortgage loan.

Is it worthwhile to work with a mortgage broker to help you find a good deal, or should you go straight to a bank, cutting out the middleman?

Before choosing your next major course of action, such as whether to work with a mortgage broker or a direct lender like a bank, consider the following information.

Working with a mortgage broker

A mortgage broker is essentially a middleman. They serve as the go-between for you, the borrower, and the lender.

A mortgage broker will connect you with their lending partners to find the best deal for your needs and circumstances rather than trying to sell you anything. This network can be very helpful because mortgage brokers frequently have access to better rates because of their connections to lenders.

The mortgage broker won’t charge you any fees if you are a creditworthy borrower (someone with a good credit score or who can pass the stress test, for example). However, if you don’t have good credit, you might have to pay a fee.

Best Mortgage Rates in Canada

Find the most affordable mortgage rates by side-by-side comparing the top mortgage lenders and brokers in Canada.

Pros and cons of getting a mortgage through a broker

Large selection. Mortgage brokers can offer and compare mortgage products from multiple lenders.

Discounted rates. They may also be able to offer discounted rates that you couldn’t access on your own.

They’re on your side and legally obligated to work in your favour.

You won’t get every option. Not all lenders work with mortgage brokers, so your lending pool may not be as big as you think.

Fees. Even though mortgage brokers are free for creditworthy borrowers, there are still fees to be aware of built into your contract.

Working with a bank as a direct lender

For your mortgage, a direct lender like a bank will only offer one option if you approach them directly: theirs.

Of course, you can do your own research and comparison shopping at various banks, but if you had used a mortgage broker, you would have saved yourself a lot of time and effort.

That’s not to say you shouldn’t apply for a mortgage at a large bank. If you are a frequent customer of a specific Canadian bank, you may be able to take advantage of that relationship and leverage your devotion to obtain a better rate.

Pros and cons and getting a mortgage directly from the bank

Familiarity and trust can be a big deal when it comes to something as important as buying a home.

You can leverage your relationship. It may be possible to get better deals and perks with the bank if you have a relationship with them, but you will have to negotiate those independently.

Limited selection. Banks only offer their own products.

Strict conditions for approval. Banks typically have higher eligibility requirements, which can make it challenging to be approved.

Is it easier to get a mortgage through a broker?

When it comes down to it, using a mortgage broker or not is a personal choice, but they can certainly make things simpler. They do the research for you, which saves you a ton of time. Additionally, mortgage brokers frequently have access to rates that you wouldn’t get if you looked for a lender on your own.

Keep in mind that if you are not deemed a creditworthy borrower, mortgage brokers may charge you fees. High mortgage broker fees and other costs may be incurred as a result of failing the stress test, having high debt service ratios, and having a low credit score. Of course, if you couldn’t get a mortgage otherwise, these extra costs might be worthwhile.

The most common places that Canadians go to find a mortgage tend to be big banks and mortgage brokers.

However, they aren’t the only options. Today, you can find a mortgage online thanks to the abundance of comparison websites. You can also look to private lenders, trust companies, insurance companies, caisses populaires, loan companies, and even credit unions.

Take the time to shop around and compare lenders if you are not using a broker to find the best rates.

Travel and personal finance are among Hannah Logan’s areas of expertise as a writer and blogger. You can follow her personal travel blog EatSleepBreatheTravel. com or find her on Instagram @hannahlogan21. DIVE EVEN DEEPER.

FAQ

Is it better to work with a mortgage broker or bank?

Working directly with a bank gives you more control and is more affordable than using a mortgage broker, who can provide a wider range of options and speed up the mortgage process.

Why is a mortgage banker better than a mortgage broker?

Brokers cannot approve or deny loans; only bankers can do so. While using a mortgage broker may appear to have some benefits, there are a number of drawbacks: Since brokers aren’t employed by the lender, they have less control over the procedure.

Is it better to go through a mortgage broker?

You may be able to save time, effort, and money by using a mortgage broker. Compared to you, a mortgage broker might have better access to lenders. But a broker’s objectives might not coincide with your own. Dealing with lenders directly may result in a better loan deal.

What’s the difference between a bank and a mortgage broker?

In contrast to a direct lender, which is a bank or other financial institution that determines whether you qualify for the loan and issues the check if you do, a mortgage broker serves as an intermediary by assisting consumers in finding the best lender for their circumstances.