When you’re looking to get a mortgage you’ll likely to end up at either a bank or a mortgage broker through a mortgage brokerage. While both are able to provide you with the mortgage you’re looking for how they go about it can be very different.
What is a “Banker”?
A banker is someone who is employed by a bank. In the context of mortgages, a banker is a employee the bank asks to sell mortgages.
A banker will be able to show you the various lending products offered by the bank, including products such as mortgages, lines of credit, and credit cards.
However, bankers are paid by the bank to represent the bank’s products, so their knowledge of competing products is likely to be limited. They are also paid more if they can cross-sell you further bank products.
What is a “Mortgage Broker?”
A mortgage broker refers to someone who works as an intermediary between you and the lender. Unlike a banker, mortgage brokers have access to a large variety of mortgage products offered by multiple banks, credit unions, trust companies and other financial institutions.
Mortgage brokers are paid on commission. The cost of the commission is paid by the lender (not you, the borrower) once the deal is completed.
Canadian mortgage brokers have access to a wide variety of mortgage products offered by all major banks, as well as alternative lending options. This allows them to find the best mortgage option to suit your homeownership needs and financial situation.
Who Should I See Regarding a Mortgage?
The bank would likely prefer it if you worked with them directly (there is a reason the big 5 banks are some of the most profitable companies in Canada). However, if you value choice, further education and the opportunity to save money, a mortgage broker is likely to be better situated to meet your unique financial needs.
There are several reasons you may choose a mortgage broker over a banker. Mortgage brokers have access to a variety of lending products offered by many different lenders. This is advantageous because:
- Not all mortgages are the same. Different mortgage products come with different options, such as pre-payment options, payment deferral options, and other components that you may find are better suited to your unique financial situation
- A mortgage broker understands the differences between the various mortgage products that are available and can provide you with some direction so you can select a mortgage that is tailored to your unique needs.
- Mortgage brokers shop around on your behalf. Because different lenders are able to offer different rates, depending on the nature of the product and your credit score. Your mortgage broker is able to compare different mortgages and lenders against one another and weigh the pros and cons of each product.
- A mortgage broker is focused on getting the right mortgage for you, not for them. After your mortgage broker sits down with you to discuss your needs and priorities they can provide you with a list of options that meet your criteria. This list will likely include options from various lenders and feature a variety of interest rates, prepayment terms, and other criteria. Once you have had a chance to review the list your mortgage broker will work with you to determine which mortgage makes the most sense for you. You can then make a fully informed choice.
Once you have determined which lender and mortgage option is best suited to your financial needs and home ownership goals your mortgage broker will act as an intermediary between you and the lender. Your mortgage broker will guide you through this process, help you get your paperwork in order, and point you in the right direction throughout the application and approval process.
An experienced mortgage broker knows exactly what happens during each step of the mortgage process, and can help you determine what you need to do next. This helps reduce the anxiety associated with the mortgage application process. Your mortgage broker will also help you keep everything organized so that the process can be as simple and smooth as possible.
Finally, your mortgage broker will help you get the best possible interest rate from your lender. In the event that the lender you have selected isn’t working out, or if the file begins to turn sour, your mortgage broker will have a variety of backup options readily available to make sure the file gets done.