When it comes to getting a mortgage, Canadians have two options: banks or mortgage brokers. But which one is better, and can a mortgage broker actually get a better rate than the bank?
Let’s start with the basics. Banks offer their own mortgage products, while mortgage brokers have relationships with multiple lenders and can recommend products from all of them. This means that if you go directly to a bank, you’ll only have access to their in-house mortgage products. On the other hand, working with a broker allows you to compare rates and products from multiple lenders.
But can a mortgage broker actually get a better rate than the bank? The answer is yes, and here’s why:
Firstly, brokers have access to a wider range of lenders than banks do. While banks have their own set of mortgage products, brokers have access to multiple lenders, including smaller banks, credit unions, and private lenders. This means that brokers can offer more options to borrowers and potentially find a better rate.
Secondly, brokers have relationships with lenders, which can give them more negotiating power. Because brokers send a lot of business to lenders, they may be able to negotiate better rates and terms for their clients. This can translate to lower mortgage rates and more favourable terms for borrowers.
Thirdly, brokers can provide valuable advice and assistance throughout the mortgage process. Unlike banks, brokers are not limited to selling their own products, and can provide unbiased advice on which mortgage product is best suited to a borrower’s needs. They can also help borrowers navigate the complex mortgage process and negotiate with lenders on their behalf.
So, if you’re looking to get a mortgage, should you work with a broker or go directly to a bank? It depends on your personal situation and preferences.
If you’re someone who likes to shop around for the best rate and product, and wants someone to do the legwork for you, a broker might be the way to go. Brokers can help you compare rates and products from multiple lenders, and can negotiate on your behalf to find the best deal.
However, if you already have a relationship with a bank and are happy with their mortgage products and rates, there’s no harm in going directly to them. You can always work with a broker later on if you want to compare rates or switch lenders.
It’s also important to note that while brokers can offer a wider range of mortgage products and potentially better rates, they may charge fees for their services. However, these situations are rare and fees are often offset by the savings that borrowers can achieve by getting a better mortgage rate.
In summary, a mortgage broker can potentially get a better rate than the bank due to their relationships with multiple lenders and ability to negotiate on behalf of their clients. However, whether or not you should work with a broker depends on your personal situation and preferences. Ultimately, the most important thing is to do your research, compare rates and products, and choose a mortgage that works best for you.