Mortgage Broker vs. Bank

According to a recent report from the Canadian Mortgage and Housing Corporation, nearly two-in-five homeowners in Canada used a broker for their mortgage in 2017. The 39 per cent figure was an increase from 33 per cent the previous year. The percentage is even higher among first-time home buyers.

Why are more and more people turning to mortgage brokers instead of the mortgage specialists employed by the banks?

While there is a generational gap at play; Millennials are constantly looking to do things differently than their parents and previous generations, and are more likely to break from the traditional means of getting a mortgage. The mortgage broker industry has done a great job in the last decade of educating the public on the advantages of using a mortgage broker instead of a bank.

But there’s more going on with the trend toward brokers.

Mortgage brokers offer a level of service that can’t be matched by a bank mortgage specialist.

Here’s how.

  • Brokers work with dozens if not hundreds of different lenders and can almost always beat the rate from a bank, because the bank mortgage specialist has only one product to choose from.
  • Commissions for brokers are often much larger. The reason why a bank mortgage specialist never gives you their best rate is that it affect their commissions. A mortgage broker has the affordability to buy the rate down to outperform the best rate a bank can offer.
  • A mortgage broker isn’t here to upsell. Brokers just do mortgages and the best brokers have years of experience in the industry. A bank mortgage specialist will try to sell you on other bank products like opening a new account, a credit card, or RRSP.
  • Call a mortgage broker and they’ll either pick up the phone or get back to you within minutes. Need to sign a document on the weekend, a mortgage broker will come to your house at any time of the day.
  • Call a bank and it might be days before you hear from a mortgage specialist if at all. They’re certainly not going to come to your weekend beach house to make sure all the I’s are dotted and T’s crossed.
  • And the best brokers are more focused on the relationship with their clients over their commission. Like in any industry, there can be bad apples; brokers just looking at a commission from the file in front of them.But a good broker isn’t worried about the one file because they want to build a long-term relationship as a possible referral source if the file goes smoothly.
  • Best yet, the services of a broker are free. You don’t pay anything to use their expertise.

If you’re in the market for a new home or just looking to renew, it’s in your best interest to call a mortgage broker first.

Source: Dominion Lending Centres of Canada