Why Use a Mortgage Broker Instead of a Bank?

When it comes time to get a mortgage, the vast majority of Canadians do what seems most logical: they walk into the bank where they have their chequing account, the one they’ve been with since they were a kid. It’s a comfortable, familiar first step.

But is it the most financially advantageous one?

While your bank can certainly provide you with a mortgage, there is another powerful option that every single homebuyer and homeowner should consider: working with a licensed, independent mortgage broker. The choice between these two paths can have a profound impact on the interest rate you get, the product you qualify for, and the overall quality of advice you receive.

The Bank's Mortgage Specialist

When you walk into your local bank branch and ask for a mortgage, you will be introduced to their in-house mortgage specialist. It's important to understand who they are and the role they play.

Who Are They?

A mortgage specialist at a major bank (like RBC, TD, CIBC, BMO, or Scotiabank) is a dedicated employee of that single institution. Their primary role is to understand and sell their bank's specific suite of mortgage products. They are often very knowledgeable about their employer's offerings and can be a helpful resource for navigating their bank's particular application process.

The Pros of Using Your Bank

There's a reason so many people start with their own bank. There is a definite comfort and convenience factor.

Convenience: Your bank already has most of your financial information, your account history, and your contact details. This can make the initial application process feel simpler and more streamlined.

Existing Relationship: You have an established relationship with the institution. You know the people, you know the brand, and you may feel more comfortable dealing with a familiar face, especially for such a large financial transaction.

Potential for "Relationship Pricing": In some cases, a bank may offer a small discount or a preferred rate to a long-time client, especially if you have other significant assets with them, such as large investment or business accounts.

The Critical Limitations

While convenience is a benefit, it comes with significant limitations that can cost you money in the long run.

A Very Limited Product Shelf: This is the single biggest drawback. A mortgage specialist at RBC can only offer you RBC mortgage products. They cannot tell you if Scotiabank or a monoline lender has a better rate or a more suitable product for you. Their toolkit is limited to what their one company sells. If you don't fit perfectly into their specific qualification box for one of their products, their only option is to say "no."

Their Loyalty is to the Bank: It is crucial to remember that a bank's mortgage specialist is a salaried employee whose ultimate loyalty is to their employer. Their job is to sell you their bank's product and to maximize the bank's profit on that transaction. While they are professionals, they do not work for you. Their role is not to provide unbiased advice on the entire mortgage market; it is to close a deal for their institution.

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The Mortgage Broker

A mortgage broker operates under a completely different model. We are independent, licensed professionals who act as an intermediary between you (the borrower) and a wide variety of lenders.

Who Are They?

A mortgage broker is not an employee of any single lender. We are licensed and regulated professionals who have access to a vast network of lending institutions. In Ontario, we are licensed by the Financial Services Regulatory Authority (FSRA) and are held to a strict code of professional conduct.

The Broker's Unmatched Advantage: Choice

This is the core of our value proposition. We don't have a limited shelf of products; we have access to the entire wholesale mortgage market.

Access to the Entire Market: A mortgage broker has established relationships with dozens of different lenders. This includes:

The Major Banks: We can often get the same, or even better, rates from the big banks you already know.

Monoline Lenders: These are large, national lenders (like MCAP, First National, and CMLS) that only work with mortgage brokers. They often have some of the most competitive interest rates and flexible products on the market, but you cannot access them by walking into a branch.

Credit Unions: We have access to local Ontario credit unions that often have unique products and more common-sense lending guidelines.

Alternative ('B') Lenders: For clients who don't quite fit the 'A' lender box, we have access to a full suite of Subprime lenders.

One Application, Dozens of Lenders: The process is incredibly efficient. You complete one mortgage application and provide one set of documents to us. We then shop your application to the entire market on your behalf, forcing lenders to compete for your business. We analyze the various offers and come back to you with the best options.

The Broker's Duty is to You

This is the fundamental difference in the relationship.

An Independent Expert: As brokers licensed by FSRA, our legal and ethical duty is to our client, not to any one lender. Our job is to provide unbiased, expert advice and find the absolute best mortgage solution for your specific financial situation. Your best interest is our only interest.

Specialized Expertise: Mortgages are all we do. Unlike a generalist bank employee who may also sell credit cards and mutual funds, we are specialists in one thing: mortgage financing. This deep expertise is invaluable when dealing with complex files, such as applications for self-employed individuals, real estate investors, or clients with bruised credit—situations that often result in a quick "no" from the big banks.

A Head-to-Head Comparison: Broker vs. Bank

Let's compare the key factors side-by-side to make the choice clear.

Choice of Lenders

Bank: Offers products from one lender (themselves).

Broker: Offers products from dozens of lenders across Canada.

Best Interest Rate

Bank: Can only offer you their best rate on that given day.

Broker: Can find you the entire market's best rate by making lenders compete.

Who They Work For

Bank: The mortgage specialist works for the bank.

Broker: The mortgage broker works for you, the client.

Cost to You

Bank: Their services are built into the bank's profit margin.

Broker: In the vast majority of cases (for 'A' and 'B' lender mortgages), the services of a mortgage broker are free to the borrower. We are compensated by the lender who ultimately funds the mortgage, much like an insurance broker.

Making the Smart Choice for Your Mortgage

While going to your bank is a comfortable and familiar option, working with a mortgage broker is a strategic one. Using a bank is like walking into one store at the mall and hoping they have your size. Using a mortgage broker is like having a professional shopper who goes to every single store in the mall to find you the absolute best product at the best price.

Having an independent, licensed expert shop the entire market on your behalf is the only way to ensure you are truly getting the best possible mortgage deal. You wouldn't get a diagnosis from just one doctor without considering a second opinion, so why would you trust your single biggest financial decision to the offer from just one lender?

Don't settle for the first offer you get. Contact our brokerage today for a no-obligation consultation and see what the entire market has to offer you.

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