Mortgage Basics

Mortgage Brokers vs. Banks: Which Is Right for You?

Mortgage Brokers vs. Banks: Which Is Right for You?
Written by
  • Ashley Howard
| 31 October 2024
Reviewed, 31 October 2024
Share:

Table of contents

    When securing a mortgage, many Canadians face the choice between a mortgage broker or a bank. While both options will help borrowers access home financing, choosing one over the other can significantly impact your homebuying experience based on your needs.

    Banks and mortgage brokers offer unique advantages and disadvantages for borrowers, which can affect finances and long-term financial health. With many mortgage choices and differing service levels, it’s essential to explore your options and carefully consider which avenue best suits your mortgage strategy.

    Key Takeaways

    • Mortgage brokers offer access to a broader range of lenders and the potential for rate discounts.
    • Banks offer the convenience of an established relationship but are limited to in-house product offerings. 
    • Your needs, finances and preferences will determine whether a bank or mortgage broker is right for you.

    Popular Mortgage Rates

    Fixed
    Variable
    in

    0.00%5 Year Fixed

    Get Rates

    0.00%3 Year Fixed

    Get Rates
    Check more rates

    What’s the Difference Between a Bank and a Mortgage Broker?

    The difference between banks and mortgage brokers primarily lies in the products they have available to offer you. Banks are direct lenders that handle everything in-house. Working with your bank can be the most convenient option since you likely already have an established banking relationship. Some big banks may offer lower rates tied to your day-to-day banking relationship. However, banks are limited to only their mortgage products, which can limit your financing choices or keep you captive. 

    Mortgage brokers act as intermediaries, connecting you with a range of lenders. This provides you with more options, and you will still have access to mortgage products from big banks through a broker. Many big banks in Canada work with brokers, allowing you to compare products across banks and lenders before choosing a solution that works for you. 

    Banks: The Familiar Choice

    Banks offer the familiarity and convenience of an established relationship and integrated financial services. Securing a mortgage through your bank can streamline the process, especially if you value the ease of managing all your finances in one place.

    Pros and Cons of Banks

    Pros:

    • Simplicity and direct access to services.
    • Established brand trust, customer service and local presence.
    • Potential discounts for having a relationship and various day-to-day banking products.

    Cons:

    • Banking officers are generalists and not mortgage experts. 
    • Limited selection of mortgage products.
    • Potentially stricter eligibility criteria.
    • Less flexible negotiating mortgage terms and conditions.
    • They may not always offer the lowest rates.
    • Usually, mortgages are registered as collateral charges, keeping borrowers captive. 

    Mortgage Brokers: Expanding Your Options

    Mortgage brokers act as intermediaries between you and various banks and lenders. They navigate the mortgage landscape on your behalf, comparing rates and terms from multiple sources to find the best fit. This can be particularly advantageous for those with unique financial situations or who require specialized mortgage products.

    Pros and Cons of Mortgage Brokers

    Pros:

    • Mortgage brokers are professionally licensed mortgage experts.
    • Access to a network of multiple lenders with varying qualifying requirements.
    • Potential for competitive rates and customized solutions.
    • Guidance and support throughout the mortgage process. 
    • Time savings from comparing rates and features between banks and lenders on your own. 

    Cons:

    • Some brokers may charge fees, depending on the lending solution.
    • A broker’s network might influence your options and discounts since not all lenders work with all brokers. 
    • Quality of advice can vary between brokers based on their experience and relationships with lenders. 

    Which Is Right for You?

    Choosing between a mortgage broker and a bank depends on your mortgage needs and financial circumstances. 

    Your Financial Situation 

    Do you have a complex financial history or require a specialized mortgage product? A broker might be better equipped to navigate these complexities. 

    Your Comfort Level

    Do you prefer familiarity with your bank and having everything in one place? Or are you comfortable working with an intermediary and managing a mortgage separate from your daily banking?

    Timing

    Are you comfortable dedicating time to research and compare mortgage options, or do you prefer a more hands-off approach? Are you working on a tight timeline and need a mortgage quickly? A broker may have relationships with lenders that can expedite the process to help you meet your deadline, compiling and presenting only the mortgage solutions that best suit your unique needs. 

    Frequently Asked Questions

    Is a mortgage broker more affordable than a bank?

    Mortgage brokers won’t charge you directly for their services with prime lending. You may be charged a fee if your mortgage requires private or subprime lending. In terms of rates, mortgage brokers often have access to more competitive rates. Still, the overall affordability over banks depends on individual lenders and each broker’s relationship and business volume with that lender.

    Are online mortgage lenders safe?

    Online mortgage lenders are safe. However, before using their services, you must ensure that the lender is reputable and properly licensed in the province or territory where they operate.

    Can I negotiate rates directly with my bank?

    Yes, you can typically negotiate rates directly with your bank. Some banks may be less flexible than brokers when negotiating terms and may not offer the best rates upfront when you begin negotiations.

    Final Thoughts 

    Whether you choose a mortgage broker or a bank, finding the right mortgage professional can significantly impact your home financing journey. Selecting the right mortgage provider ultimately depends on your financing and servicing needs. 

    For tailored guidance and expert support, contact our mortgage professionals today to start your journey towards homeownership.