How do you decide on a bank or a mortgage broker for your mortgage?
The simple answer is the decision is up to you. Below you’ll find some pros and cons of each. Whichever root you pick, I’d be happy to connect you with my most reliable and talented contacts.
Working with a mortgage broker
The first question that usually comes up is how a mortgage broker makes money. Using a mortgage broker is a totally free and personalized service. Mortgage brokers get paid a commission from the lenders they refer.
This means a few good things:
They are incentivized to keep you happy. You following through on a lending situation that makes you happy is the way they make their money.
They have a list of 100+ lenders they work with and can find one that suits you best.
They can pass on volume discounts they may receive from lenders.
On the flip side, it also means they can have a tendency to sway you towards a specific lender that pays a better commission or volume-based commission.
Working with a bank
The most common reason for choosing your bank for a mortgage is to consolidate your financial services.
This can come with some added bonuses:
All of your finance-related dealings are in one location which makes everything easier if your goal is to stay as simplified as possible
You may qualify for additional perks for continued loyalty and having multiple dealings with the same bank (eg your savings, your credit cards, your business account, etc)
Unfortunately, banks do have their downfalls because they are set up to sell their own services and only their own.
This means:
Fewer options with higher rates as they are limited to what the bank offers
Stricter conditions for approval because they have high standards when it comes to lending out their money
Negotiating is a must and a tough ride because commission is based off sales
Disclaimer: I am not a mortgage specialist and the above should only be taken as loose advice. Please contact a mortgage specialist or bank for formal advice.