When shopping for a mortgage, many people traditionally go to their local bank to discuss options with an in-house mortgage expert. However, working with mortgage brokers is becoming increasingly popular in Canada due to the improved consumer choice they offer and their ability to secure the lowest possible mortgage rates.

What is a Mortgage Broker?

A mortgage broker is like a one-stop shop for mortgages. Unlike a bank, which can only offer its own products, mortgage brokers have access to a wide range of lenders, including major banks, credit unions, and trust companies. This means you only need to meet with one person to explore multiple options.

If you prefer the security of a big bank, a mortgage broker can arrange that too, often securing lower rates than you might be able to negotiate yourself because of the volumes we bring to them. They can also work with what we call "B" lenders and alternative lenders, making them a valuable resource for those with unique financial situations, such as business owners, freelancers or individuals with past credit issues.

Pros of Using a Mortgage Broker:

Easy to Use: Mortgage brokers streamline the process by offering access to multiple lenders in one meeting, which can be done in person or over the phone.
Free Service: Brokers are paid by lenders, so their services are free to you.
Better Rates: Brokers often receive volume discounts from lenders, enabling them to offer lower mortgage rates.
Access to More Lenders: Brokers can provide access to dozens of lenders, increasing your chances of finding the best mortgage product.
Expert Advice: Mortgage brokers are specialists who can offer tailored advice, especially helpful for those with unique financial needs.
Independent and Impartial: Good brokers provide unbiased advice, focusing on securing the best rate and product for you.

Cons of Using a Mortgage Broker:

Lack of Familiarity: Brokers don't have the huge marketing budget of the big banks in order to keep rates low, but this can mean that you have to build a new relationship and get to know your broker first.
Additional Documentation: Working with a broker may require more documentation, especially if you don’t have an existing relationship with them. Your bank monitors all of your current account and transaction information to assess your application, which may require less paperwork.

Alternatives to Mortgage Brokers:

Your Current Financial Institution: Convenient and familiar, but may not offer the best rates or range of products.
New Lender Directly: Can be a good option if you need a specific lender, but often, better rates can be found elsewhere.
Credit Unions: Approaching them directly can be beneficial, though many do not work with brokers and they can be very limited.

Conclusion:

Should you use a mortgage broker? While working with a broker generally offers many advantages, it's wise to get quotes from both your current financial institution and at least one mortgage broker. This approach maximizes your options and increases your chances of securing the best possible mortgage rate.