Mortgage Broker

Licensed Brokers, usually commission based, work as middlemen between mortgage lenders and borrowers. These brokers do not work for any particular lender; however, they have developed connections with all different types of lenders including the big banks. 

Brokers will assess your needs and calculate how much you can be approved for. They will facilitate the mortgage process by sending in your application and negotiating terms on your behalf. 

There are several reasons to use a broker over a big bank. Borrowers may have trouble qualifying at the bank due to income or poor credit history, have complicated financing deals, or simply would prefer not to do the negotiating. A broker may also be able to find better rates than the banks.  To sweeten the deal, brokers may pay for things like inspections or appraisals out of their own pockets.

Big Banks

At the big banks, mortgages are handled by an Account Manager or Mortgage Specialist. They are usually unlicensed and paid by salary, commission, or a combination of salary plus commission. They will sit down with you and discuss what best fits your needs, however they will only be able to offer you products that are available through the bank that they work for.

Although banks post their rates, they are almost never the best rates you can get. You will have to negotiate the best rate. If you have a pre-established relationship with a bank, such as chequing and savings accounts, RRSPs, investments etc., qualifying can be easier and could result in a better discount off the posted rate. Furthermore, they may be able to offer you other perks similar to brokers plus other bank related bonuses, like a Home Equity line of Credit (HELOC), free banking, or free safety deposit box.

Which is right for you?

The major deciding factor tends to be credit history. If you have a good credit history, shop around the big banks and see what you can get. If your credit history is of concern, you may want to try a mortgage broker. Additionally, having someone else shop around for you can be far more convenient. If you do decide to go the broker route, make sure the mortgage you are approved for is something you can financially handle.

Also note that if you are purchasing a presale home most new home developments will have an offer and interest rate hold program through one of the big banks. If you are eligible, you are will be able to lock in that rate until your home is ready for you to move in even if the rate increases. Furthermore, you are not tied to the bank or mortgage if the rate goes down. If you find a better rate somewhere else, you are free to switch. Ask the sales associates at a presale Presentation Centre for more information.