With an abundance of bank branches and mortgage brokers available, it’s no big secret that the Canadian Mortgage Market is a saturated, hyper-competitive one. Ultimately, this is a great thing for you – the customer, because it drives down rates. However, given the heaps of information and the number of choices out there, one of the drawbacks is that trying to make good financial decisions, can be like trying to give yourself a root canal. Given this, it can help to start with one of the higher level distinctions in making your mortgage decisions. So here we look at the difference between using Banks vs Mortgage Brokers :

  • Works for you AND the lender
  • Exists to lend money
  • Charge higher rates and penalties over long term
Mortgage Brokers
  • Works for you only
  • Exists to save you money
  • Search for savings opportunities over long term

These represent the three main differences between a mortgage broker vs. bank, but there are several other important differences to consider. In true ‘Top 10’ fashion, we will take a look at 7 more differences to provide a more complete perspective.

Broad Product and Service Offering Specialization in Mortgages If you had a unique and serious health issue, would you want to seek diagnosis and ongoing treatment from a General Practitioner, or a Medical Specialist? Mortgage Brokers are mortgage specialists, and the good ones live and breathe mortgages knowing all the ins and outs. So using a Mortgage Specialist gives you an edge in this regard.
Uses Bank Representatives Shops your deal among several Mortgage lenders The job of an Account Manager or Mortgage Rep employed by a bank is to provide you information on their mortgage offering, negotiate a rate and help to gather required documents. This is typically the end of the Mortgage Reps relationship with a client, who is then contacted by a Bank call centre on renewal or in some cases by an Account manager in a Branch. In comparison, a Mortgage Broker provides a closer, more personalised relationship over the long term in case you need help or would like to make a change.
Single Product View Market View Use the entire market to your advantage, not just one lender.
Product Focus Solutions Focused Experienced brokers will focus on creating short and long term solutions for you based on your goals, such as becoming mortgage free sooner, or perhaps purchasing a rental property. Beyond ‘selling product’ they will use all the information available in the market – not just one lender – when giving objective guidance.
More Familiar Less Familiar Big banks spend millions on marketing and are more familiar sounding than most brokers. This said, a Broker can access the banks and their mortgages, and in many cases, can save you the haggling for a lower rate. Good Brokers will focus their energy on providing quality information and service and less on marketing.
Higher Market Share Lower Market Share The market share between banks and brokers has been pretty stable for the past few years hovering at about 60% (bank) – 40% (broker). This is mainly because of the banks existing relationships with customers who hold accounts or other products at, as well as powerful advertising. Choosing a Broker specialist for your mortgage does not mean ending a relationship with a bank – unless this is desired – and in many cases a broker can work with your own bank to help lower your Bank rate even further.
Long term Relationship with a Bank Long term Relationship with a Person Typically over the years – those working within a bank will change positions, move to a different bank or even a different career. Given this, the Banks emphasise creating a relationship between their Brand and the customer. Mortgage Brokers who have been in the business for several years are much more likely to continue to be personally available and working for you over time. To have the same person throughout your mortgage can help make things easier over time, especially if you have discussed specific goals or encounter more significant changes.

No matter where you are in Canada – weather its Kitchener Waterloo, Hamilton, Toronto or London, this information will hold consistent and true. From here, you are well positioned to fine tune your mortgage shopping by looking into mortgage strategies, features and of course rates. Feel free to check out a few other articles on this site to discover more. Thanks for reading, and for more information feel free to visit.