When choosing the best channel through which to get your mortgage, there are many things to consider. In the past, potential homebuyers would look exclusively at banks for mortgages. Now, there are many more options available, as mortgage brokers continue to crop up.
Banks are chartered institutions with personal banking, credit card, loan, and mortgage departments and services. Examples of such institutions are CIBC, RBC, and BMO. Banks currently occupy 60 percent of the market share. The advantage with going through a bank for your mortgage is their ability to consolidate services, particularly if you already have an existing relationship with the bank. You may not get the cheapest rates by going through a bank, however, because they can only offer you their mortgage rates.
Mortgage brokers are licensed mortgage specialists who have access to multiple financial institutions and their interest rates. Mortgage brokers cannot give you a loan, but rather can direct you to the best rates available across Canada. Once they get you the mortgage, they put you in contact directly with the lender. According to the Canadian Association of Accredited Mortgage Professionals, 40 percent of mortgages in Canada originated from mortgage brokers.
A major benefit to going through a mortgage broker is their extensive knowledge of the entire mortgage market. Because they have access to multiple financial institution’s information, they can advise you which lender will consider giving you a mortgage and which will not based on your individual circumstances. This is particularly useful for those will poor credit ratings, as mortgage brokers have access to banks specializing in serving people with poor credit and can leverage relationships with larger banks as well.
Mortgage brokers will help you apply for your mortgage, including the pre-approval process and the home appraisal. Once you have purchased your home with the mortgage set up for you by the mortgage broker, the financial institution from which you got the mortgage will provide customer service, although you may still contact the mortgage broker during the life of the mortgage.