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When it comes to making decisions about your mortgage, you’ll find you have more options than you think. There are a lot of questions you’ll have to ask yourself as you move through the process of buying a home and qualifying for a mortgage and one of them will inevitably be, “Do I go with a broker or a bank?” While both are great options, we’ve broken each of them down by their unique pros and cons to help you decide which is the best fit for you.
What Can My Bank Do For Me?
When it comes to using your bank, it’s typically the first option people think of when it comes to mortgages. Canada’s top 5 banks (RBC, TD Bank, Scotiabank, BMO, and CIBC) are well-established and trusted sources for all your financial needs. You’ve already built a relationship with your bank and as such, they allow you to consolidate all your services under one roof. They also have brick-and-mortar locations you can physically visit, which is another plus in the convenience column.
On the other hand, banks can only access and offer their own products which means you’ll be limited in terms of what options are accessible to you. While they regularly provide discounts on their posted mortgage rates, it’s up to YOU to navigate that territory on your own. They’re also considered A-lenders which means they tend to look for lower-risk borrowers with the best credit scores. They may be able to provide great rates, but you should expect them to come with strict policies.
What Can A Mortgage Broker Do For Me?
Mortgage brokers essentially “shop” around, negotiate for you, and present the lowest rate on the market. This means that the volume discounts achieved by mortgage brokers are passed directly to you. Many of the major Canadian banks sell through mortgage brokers including TD Bank, Scotiabank, CIBC and ING. Mortgage brokers also offer more flexibility in terms of communication and meetings since they aren’t working within the confines of a larger business. If you’re a bit of an introvert or someone who prefers a less-conventional method of connecting (aka texting and video calls), you may like the flexibility offered by mortgage brokers.
Unlike the approachability of your personal bank, you likely don’t have relationships built with any mortgage brokers. As a result, some buyers will overlook this option and opt for the convenience and comfort factors provided through their own banks.
It’s important to note that mortgage brokers have a vast amount of knowledge when it comes to the market as a whole, since they don’t strictly deal with their own products like banks do. This can be particularly useful if you’re dealing with poor credit or have specific needs as they may have insight into who’s most likely to consider your case given its specific circumstances. If you’re self-employed, have a low income, high amount of debt, or a history that includes a recent bankruptcy, a mortgage broker might have a better chance of finding a lender for you.
Purchasing a home is likely the largest financial decision you’ll make in your lifetime. Understanding your options is vital to ensuring the process goes smoothly and the result works perfectly for your individual needs. Luckily, you never have to lock in to one specific lender or rate forever so there’s always an opportunity to review and revisit your current situation. Looking for some additional insight or professional guidance? Contact us to learn more about how we can help!