Mortgage Broker Vs. Bank
Updated: Nov 8
What's the difference between working with a mortgage broker Vs. getting a mortgage from the bank? In this post I'll break down some of the key differences
Working with a Mortgage Broker:
What is a Mortgage Broker?
Unlike a direct lender, a mortgage broker does not approve or fund the mortgage loan, but acts as an intermediary between a lender and you the borrower. A broker will help you identify which lender will be the best for you in your current financial and employment situation.
What does it cost to work with a mortgage broker?
Working with a broker typically costs nothing for the borrower (except in the occasional instance of unique private lending) in the majority of situations the lender compensates the broker for being the intermediary.
The benefits of working with a mortgage broker:
A mortgage broker works with a large network of lenders to provide a variety of options that may better suit your needs than what your bank can provide. You can consider it like "shopping around" for the best rates or terms for your mortgage without having to meet with multiple lenders yourself.
A mortgage broker is also able to provide flexibility of options for those with circumstances that put them outside of the categories banks typically recognize for approval. These might be self-employment, unsteady employment, poor credit or recent bankruptcy.
When working with a mortgage broker you will complete an application and then the broker "shops around" for you. Doing this you avoid the time-consuming task of apply to individual lenders and being subject to multiple credit checks.
Working with a Bank or Direct Lender:
A bank, or Direct Lender will decide whether you qualify for a mortgage and approve or deny you.
You may find the process speedier if you are well-qualified and have a long standing relationship with your bank. This is because the bank or lender communicates with you directly: however, this also means you are responsible for all communication, organization and documentation they require.
If you want to "shop around" for different lenders, you will need to complete an individual application for each lender. If you are denied or make a mistake during application, you will need to re-apply or apply elsewhere. This can be time consuming and also results in multiple hits through each lender's credit check.