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Whats the main difference between a Mortgage Broker vs Bank Mortgage Specialist? We'll explain

A few years ago, when I made my first home purchase, I was inundated with recommendations on who to use for my potential mortgage.  It was overwhelming to say the least.

On the internet, I could see a lot of recommendations to go with the mortgage broker because you have someone working not for the bank to get you the best deal by shopping around for you.  The rates are definitely cheaper online compared to posted rates at the big banks.  Also, one of my colleagues recommended a mortgage broker to me that she was really happy with.

On the other hand, some of my family and friends recommended that I stick with the big banks and shop around for a mortgage specialist within the banks.  That way, I could do negotiations for myself and work with the banks to find the best rate.

Well, I considered both these options and met with a mortgage broker and also a mortgage banking specialist from the big banks.

Why Go For A Mortgage Broker

The mortgage broker acts as the middleman between the big bank and you.  They do the negotiation and dirty work for you.  Oftentimes, they find a good rate for you because they opt to go with lenders that are smaller.  They also contact lenders that may lend you money when a bigger bank normally wouldn’t because of your credit score or even debt.  Basically you get a better deal and a better rate most times if you go with a mortgage broker.

Related: How To Port A Mortgage?

Another reason you would go for the mortgage broker is that you like to root for the underdog.  Mortgage brokers often work for themselves.  If you like to support individual business rather than the big five, going with a mortgage broker might be a better option for you.  I met the mortgage broker in question on Valentine’s Day (I felt really bad because her boyfriend was outside waiting to start their date) over a cup of coffee to talk about mortgage options.  And we didn’t even use her as a mortgage broker in the end (eep!).

Related: Variable and Fixed, Open and Closed Mortgages

Why Go For A Mortgage Specialist At A Bank

Brand loyalty.  Another, Home Equity Line of Credit.  Okay that was a few words.  Though I am sure you can get a loan attached to a HELOC from a mortgage broker, it was just so easy to look around at different big banks to see the conditions for the HELOC.  Although I have not touched my HELOC or loaned any money from it, it is nice to have that option available if the need arises.  It was nice to also have the option of looking at the mortgage options and availability through the big bank website.  I could read the fine print and make a decision for myself.

A lot of people just stick with the same bank they bank with because they feel loyal to them.  I personally went with a different bank because the HELOC plans through my day-to-day banking package wasn’t apparent.

Related: Mortgage Broker or Big Bank?

Another reason to go for the big bank is that you like negotiating.  Personally, I was able to knock off 0.2% off the posted rate at the time because of my hard core negotiating skills (haha, okay probably not that hard core and the amount is quite underwhelming but it’s better than nothing).  I also enjoyed the bank calender they sent out and the generous gift card the bank sent for using them.

I met a few banking mortgage specialists and they were nice enough.  Even within the same bank (but at a different branch) I was quoted different mortgage rates.  That definitely proves the importance of being able to negotiate, knowing someone they like at the bank (e.g. if you have a friend who recommended you that is a good client to them, they will also treat you nicely), and sticking to your guns in terms of a rate you want.

Mortgage Broker vs Bank Mortgage Specialist?

Well, the choice is individual.  Some people prefer a mortgage broker, and some like I, prefer the big banks.  I don’t think it’s logical of me to want to pay more for a mortgage when I could be saving thousands, but sometimes humans are not logical.

Readers, which one did you use?

Article comments

Julie Stamp says:

I read through the comments and they seemed skewed a fair bit in the banks favour so I thought perhaps the viewpoint from a Mortgage Broker might provide some additional information for everyone. I personally believe it is everyone’s right to select the right person/institution to handle their mortgage. For some the comfort of staying with their known bank is very important to them and should not be disregarded and should be respected. Today’s consumers are more comfortable with the internet and alternate options that are available to them, we can see that with the continued increase in Mortgage Broker market share. You should always do your research on the available options, whether a good bank person or independent Mortgage Broker they should listen to you and your family’s needs and requirements and offer the advice and information you need to make an informed decision. While rate savings play a signaficant part in my business (yes I am a Mortgage Broker going on 10 years now) I also find satisfaction in providing knowledgable advice for my clients. Not everyone is knowledgable or has the clients best interests at heart on either side of the financing fence, I always recomend do your research on google, call the person or meet with them, see how comfortable you are in them and their information. I spend a lot of time helping my clients get into better mortgages then what they were put into. It can be very difficult to negotiate with a bank directly, first you do not actually know what the best rates are as they only advertise their inflated posted rates, while you may think you negotiated a deal in reality you may not have. Also bank employees, paid by the bank (Mortgage Specialists…not an official licesned designation), For Independent Licensed Mortgage people the only titles they are allowed to use is either Mortgage Agent or Mortgage Broker, period. If you see someone advertising Mortgage Consultant, Mortgage Expert, Mortgage Professional, Mortgage Facilitator etc they are actually in violation of FSCO regulations, and likely not a good sign for their experience or professionalism. You can check on an agent or broker’s status on FSCO’s website, their information whether from a card or internet should match with FSCO information, if it does not…then I would walk away. Independent Mortgage Brokers do not get paid by their lenders unless the deal funds, this is and should be a large motivator to obtain you the best rate and service. As always do your homework first, then you should end up with a great rate and service.

My in-laws just purchased two condos last two weeks and they preferred to choose a bank mortgage. They are qualified and they already passed all the requirements.

It sounds like those who love to negotiate should definitely do it on their own. Others may benefit more from having someone help them out with that part of the deal. Interesting analysis, thanks for sharing it with us!

adrian says:

I initially spoke to my bank, but they couldnt go as low as the rate of other lenders. So I ended up using a mortgage broker and got a great rate. Ratehub.ca compares rates from everyone and you can see important terms like how much extra you can pay back per year etc. it was a very easy process.

RateHub,ca says:

Thanks for recommending RateHub.ca, Adrian! We appreciate your support and will continue to provide the best mortgage rates found on the web.

Phil says:

I’m with you on this one Young… we used one of the Big Banks, plug… BMO. I have a few accounts with them, have a great “working” relationship with them for any of my needs, and have the bank managers direct dial. We were able to negotiate better terms on top of great rates. It has been advantageous for us to have spent the time building this relationship, as now that our priorities and banking needs have changed we still know how to manoeuver within the banks inner workings to meet our needs and minimize fees. One relationship to rule them all… – Cheers.

Koala says:

Big banks might be able to rate match if you get a lower rate elsewhere, but I haven’t heard much about them matching other aspects of a mortgage. What about going directly to the non-bank lenders? I used a broker, as I didn’t know enough to go to them directly, but I’m curious how well that often works out.

Joe says:

Whoa, I didn’t know you can even negotiate with the bank. I thought they just give you the rate and that’s it… I’ll do a bit more research.