17 February 2021

’Tis an age-old debate, and one that I get asked very often, “Should I use my bank or a mortgage broker?”
Commonly inquired by first-time homebuyers, yet never too late for anyone to make a change, this is a topic that everyone should understand before their next move in real estate.  Let’s take a moment to summarize the benefits of each from the point of view of a relatively unbiased, yet integral member of the transaction - your realtor :)

Pros (+) & Cons (-) of your Big Bank:

+  approval process streamlined since the bank already has copies of certain financials of yours

+  sense of stability when working with a large institution governed by strict Federal regulations

+  you may already know and trust a financial advisor at your bank

+  convenience of seeing all of your accounts, lines of credit, and mortgage on a single online platform

- rates are generally higher or equal to a broker’s at best

- can only sell you their bank’s mortgage products

- varied levels of knowledge from bank reps

Pros (+) & Cons (-) of a Mortgage Broker:

+  generally lower rates

+  you have access to the mortgage products of many lenders at your disposal, not just one

+  brokers tend to have superior market knowledge & expertise vs your avg. bank rep.

+  generally less hidden fees and penalties (ie. lump sum payments, early discharge, etc.)

+  excellent option for the self-employed, new immigrants, and poor credit applicants

+  brokers tend to be more motivated to fight for your best interests

- not all mortgage brokers are created equal

- governed by less strict regulatory guidelines = less consistency

Looking at this from my professional point of view, where my client’s overall satisfaction and the transaction closing smoothly are both equally important, I do feel as though there is a clear winner.  While there is a value to the safety one feels when simply having “my bank” handle the mortgage too, it is worth considering: at what cost does this come?

The mortgage product itself is what the majority of households are most compelled by, so why limit yourself to just one mortgage product?  This, to me, is by far the greatest advantage of the mortgage broker - the ability to custom tailor specific mortgage products to different customers based on their exact personal/financial situation.  Pair that with access to the lowest rates via multiple lending streams and it’s hard to argue against it.  We consistently see brokers with the tools available to increase our client’s budgets vs their bank pre-approval as well.  And if there’s one thing we can all agree on, it’s that we need it now more than ever with avg. detached sale price in Guelph approaching 800k.

But there’s more!  Mortgage brokers don’t just have more lenders to choose from, they also have access to both A & B lenders, while big banks only use the former.  This is important because B lenders cater to an increasingly large proportion of the adult population who are either self-employed, new to the country, have poor credit, minimal employment history, and many other common situations which the big banks will not touch or only do so with great limitations.

It’s not surprising that adoption rates of mortgage brokers have seen a steady increase over the past several years.  Among the many noted benefits above, arguably the best part about using a mortgage broker is that they remain client focused rather than sales focused.  This comes from the fact that they are there to help you first and foremost because it doesn’t matter which mortgage product you ultimately choose, you will be their client regardless of your decision.  Therefore, superior customer service is what drives mortgage brokers, rather than pushing their small range of products on you like at the bank.

Now don’t get me wrong, there are some banks that are matching the best rates out there for specific qualified clientele.  There are some absolutely rockstar mortgage agents who work for these big banks that I highly recommend.  And yes, they may even be able to pull a few strings to get you exactly what you were looking for when you honour a longstanding relationship with a large financial institution like TD, RBC, or Scotia.  So by all means, don’t assume that a big bank will never be your best option just because they offer less options.

My two cents is to always get at least a couple of mortgage pre-approvals done.  Talk to your bank, talk with a mortgage broker, and then make your own informed decision based on those discussions as to which avenue you feel most comfortable with.  Always ensure prior to having your credit information pulled that it will not have a negative impact on your credit rating too!

Don’t know where to start?  Luckily for you, I have my own tried & tested big bank and mortgage broker contacts that I’m always more than happy to put you in touch with.  I don’t receive any referral fee or incentive for doing so, these are strictly mortgage experts that I know from experience will get the job done and do so in a professional manner.  

The last thing you want is to approach the biggest purchase of your life with the wrong information.  The most difficult part about buying real estate is knowing whether you’re truly getting honest, reliable, and competent advice.

Looking to buy, sell, or invest in 2021 and want to ensure that you’re getting all of the right information from the beginning?

Drop me a line at my contact below, I’d love to hear from you!  

Thanks for reading, until next time…