Bank or Mortgage Broker? Help!
Your parents tell you to go to your bank. Your best friend suggests a call to their Mortgage Broker. What should do you do?
The first step is understanding the difference between the two.
Bank Representatives are employed by the bank and are often paid salary and commission. They are only able to offer Bank specific products. In addition to mortgage products, a bank representative is expected to be well versed in (and sell): Credit Cards, bank accounts, RRSPs, and investments.
A Mortgage Broker (or Agent) in Ontario is Licensed by The Financial Services Regulatory of Ontario (Check to see if your Broker is Licensed HERE) to sell mortgages by a specific Brokerage. Brokers have access to both Bank and Non-Bank Lenders. Brokers can offer solutions for all types of borrowers (good credit, self-employed, poor credit, and even bankruptcies).
Bank Representatives have a suite of products that they offer, with little to no exceptions outside of their traditional box. Each bank will access your credit and send it to central underwriting for approval. If what a client needs is not available within their product offerings the file comes back declined. This process can take days, even weeks, leaving the client to start again with another bank and a hit to their credit score. Choosing a Mortgage Broker allows a client to work with one person who has access to several lenders (DLC FC Funding has 121, for example). This means that the clients credit report is pulled once, and then the Broker submits the file to a lender that has a product that best suits the clients needs. Having a long list of potential lenders and understanding the various products offered saves clients both time and money.
A quick Google search tells us that a monoline lender is a lender that focuses on providing a specific type of credit such as mortgages, car loans, or personal lines of credit. They do not offer chequing or savings accounts or other related services (e.g., retirement savings products, credit cards, insurance, etc.).
Personally, I believe that Monoline lenders have a bad rap because many people don’t understand who they are and what they do! I’ve even heard people suggest that it’s unsafe to get your mortgage from anyone other than a bank. This is so untrue! It’s important to understand that all monoline lenders must have an exit strategy before they enter the marketplace making them as safe as a bank. Monoline lenders are financially backed by investors which allows them to offer various mortgage options to meet most client’s needs. While most Monoline lenders do not have brick and mortar locations, they are easily accessible online or via telephone.
There is a place in the mortgage space for banks. Mortgage Brokers do have access to several Big Banks and can place your mortgage there. The bigger question is: is the bank the BEST place for my mortgage?
Personally, I have a hard time understanding why people don’t use a Mortgage Broker. Why wouldn’t you have a licensed professional arrange your mortgage? Would you go to a massage therapist for a root canal? I hope not! When you’re thinking about getting a mortgage THE MOST IMPORTANT question should be: “what do I need my mortgage to do for me?” Once you have that answer knowing which route is best for you will be clear.
I get it. Mortgages can be scary. It’s my job to help you understand them. If you’d like to chat, please CLICK HERE to schedule a call with me. Are you already in the market and want to know what you qualify for? Hop on over to my ONLINE APPLICATION to find out!
Your Mortgage Pal,
Donna