Broker or Bank?

Early in the home buying process, prospective buyers need to decide whether or not they will use a mortgage broker to secure a lender or if they will contact lenders directly themselves.

About a third of borrowers use mortgage brokers. The rate is slightly higher among first time buyers. And no wonder. Mortgage brokers understand the mortgage market and will do the legwork involved in preparing paperwork, pulling a credit report and negotiating multiple quotes. For borrowers unsure of or unable to do their own comparison-shopping, working with a mortgage broker is a good decision. And since the lender pays the broker, there is usually no cost to the borrower. 

That said, the mortgage market is extremely competitive with lenders all striving for market share. If a borrower falls within the lending criteria of a bank or has a history of multiple products with a bank, chances are quite good that they will be offered a very competitive mortgage package, as good as the broker would be able to secure.

If you are “outside of the box” of the Banks’ risk tolerance model, for example with poor or no credit history or buying something outside of a principle residence, consulting a mortgage broker is a good idea. Mortgage brokers source lending from multiple sources including trust companies, insurance companies and private lenders so they will likely have a product for every borrower scenario. 

Either way you decide to go, mortgage broker or bank; make sure that you take the time to find an individual you’re comfortable with. Brokers and loan officers are both paid by the lender, not the borrower so be sure that whomever you work with is looking out for your needs first and foremost.

Did you know: Of Canada’s big five banks, only TD, CIBC and Scotia sell mortgages through the broker network. RBC and BMO do not.