Mortgage Brokers vs Banks: Which is Right for You?

What is a Mortgage Broker?

A mortgage broker is a licensed professional who acts as a middleman between you and potential lenders. Instead of going to a bank directly, a broker shops around for the best mortgage rates and terms that suit your financial situation. They have access to multiple lenders, including banks, credit unions, and alternative lenders, giving you more options than you might find on your own.

Key Players in the Canadian Mortgage Market

Big Banks - The major banks in Canada—RBC, TD, Scotiabank, BMO, CIBC, and National Bank—dominate the mortgage market. They offer traditional mortgage products with competitive rates, especially for borrowers with strong credit and stable income. If you already have a relationship with a bank, you might find it convenient to get your mortgage through them.
Credit Unions - Credit unions operate similarly to banks but are member-owned and often provide more personalized service. They may offer competitive rates, flexible lending criteria, and unique mortgage products that cater to specific borrower needs. Popular credit unions in Canada include Meridian, Coast Capital, and Vancity.
Mortgage Brokers/Agents - Mortgage brokers act as intermediaries between borrowers and lenders, shopping the market to find the best mortgage rates and terms for you. They work with a wide range of lenders, including banks, credit unions, and private lenders, to provide options tailored to different financial situations. That's where mortgage brokers differ, we work for you and you alone, keeping your best interests at the forefront

Pros and Cons of Using a Mortgage Broker

Access to More Lenders – Brokers have connections with multiple lenders, giving you more options.
Lower Rates – Because they shop around, brokers can often secure better rates than a single bank.
Saves Time and Effort – Instead of applying at multiple banks yourself, the broker does the legwork.
Expert Advice – Brokers understand the mortgage market and can help you navigate complex financial situations.
Flexible Approval Options – If you have a lower credit score or unique financial circumstances, a broker may find a lender willing to work with you.

Broker Fees (Rarely) – Some brokers charge fees, though many are compensated by the lender.
Not All Lenders Work With Brokers – Some banks and lenders prefer to deal with clients directly and decide not to work with brokers. However, enough mortgage lenders do work with brokers to fill the gaps of those that don't.
Lack of Familiarity - Unless you've worked with the broker in the past, you won't have a relationship with them.

Pros of Using a Mortgage Broker:

Cons of Using a Mortgage Broker:

Should You Use a Broker?

Working with a mortgage broker gives you a risk-free way to explore your mortgage options. Since you’re not obligated to move forward with any particular lender until you find the best deal, you can compare rates and terms without any pressure. In the best-case scenario, you’ll save thousands of dollars in interest. At the very least, you’ll receive personalized, expert advice tailored to your financial situation.

The Bottom Line

A mortgage broker can be a valuable asset when searching for the best mortgage deal, especially if you want more lender options, better rates, and expert guidance. However, if you have a strong relationship with your bank or prefer to handle things yourself, exploring other options might work just as well.