Bank or Broker?

 

Confused guy

So you’re buying a house…

You’ve worked your butt off, saved enough money and have started looking for a house you want to call home. However, there is one major decision to make before finally moving out of mom’s. Or you’re in a position to renew your mortgage after spending the last few years pinching every dollar to put it towards your home. In either scenario, finding a mortgage plan that will work best for you and your goals is huge priority. 

But wait, do I go to the local bank or consult with a mortgage associate!? You might be wondering which is better for you, or which option gets you a better deal. Frankly, there are several differences between both, and no right or wrong answer. So, to best show the difference, I’ve made a table that highlights the main comparisons for you to refer to.

Broker Bank
Description Licensed mortgage associate who mediates between the client and lender. Can access many different lenders with different rates and plans. Financial Institution that provides personal banking solutions including credit and deposit products.
Examples Axiom, Dominion Lending, Verico CIBC, TD, ATB, ING
Pros Shops the market for the mortgage best suited for you. Looks at all lenders, not just banks. One application applies to many lenders. Commission is paid by the lender, so it is free to use by the borrower. Can provide more solutions than just the mortgage, and can allow you to consolidate debts.
Cons Less known about in Canada. Some brokerages cannot access as many lenders as others, clients should always inquire. (ex. checking to see if brokerage can access insurance companies etc. and not just big 5 banks) Only provides products at the given bank. Can be stressful as bank is trying to sell these products to you. If you were to shop at another bank, you would have to go through the application process again.

Fun Facts

The usage of Mortgage Brokers has been steadily increasing over the last decade. As you can see below, in all areas of mortgage needs, Canadians are choosing brokers over banks more each year.

2016

2017

First time homebuyers

51%

55%

Repeat buyers

42%

44%

Refinancers

38%

40%

Renewers

26%

35%

Sourced from: “2017 Mortgage Consumer Survey.” CMHC, https://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/sure/mocosu/upload/mortgage-consumer-survey.pdf
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The opportunity to get the most personalized rate and product, as well as high end service, are key reasons why mortgage shoppers are choosing to use brokers more than the bank. 

Conclusion

In summary, brokers act as a one-stop shop for clients, are mobile, and able to work varying hours, as well as act as an intermediary between lenders and buyers with no cost to the buyer. Banks provide wider financial planning, offering consolidation and possibly incentivized products (ex. lower charges if you are fully banked with one institution).


At the end of the day, this will be the biggest financial transaction of most people’s lives. Whether you are dealing with a bank or a broker, make sure you are specific, giving the professional your whole story. Be honest about your needs so that you can be presented with all of the options that suit you, your lifestyle, and future goals.

Leave your questions or comments below – thanks for reading!

*New blog posts are released every third Tuesday! Stay tuned for the next one!*

4 Replies to “Bank or Broker?”

  1. Good work on being objective and highlighting the pros and cons of both channels. I recently left a job with one of the big 5 banks and I would always hear extreemly bias opinions and non constructive criticism. If a mortgage is all your in the market for and your not looking to consolidate other credits a broker is absolutely the way to go!

  2. Don’t forget the fact that when it comes to credit ratings, a mortgage broker can have a lot better options for those with imperfect credit. Not to mention, when a broker has access to several lenders they only hit your credit rating once, whereas if you’re doing your own mortgage shopping, the big banks will hit you every time you apply to one of them.

    1. Thanks Steve, good point! As a broker there are options available for almost every client. A one-stop shop is always a great perk too. Having to go through the application process several times at different banks can be stressful in itself. Thanks for the feedback!

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