When buying a home you have to decide where to get your mortgage from. Friends and colleagues may throw around the terms “lender” and “broker,” but you may not know what the difference is and which is actually best for you.
Many people start by going to their bank, where they keep their chequing and savings accounts. Big banks have mortgage specialists who sell their own mortgages but won’t know or promote mortgages from outside institutions.
It’s best to shop around to find the best rate and mortgage for you, and a mortgage broker will help you do exactly that.
Independent brokers are mortgage specialists who have access to many lenders and rates, and will negotiate the lowest rate on your behalf. Because they originate so many mortgages, brokers can pass volume discounts directly to you, the consumer.
|Market Share||Financial institution with banking products: personal banking accounts, credit cards, loans, and mortgages.||An intermediary paid by the lender providing the mortgage. Licensed specialist with access and knowledge of many lenders and rates.|
|Examples||Scotiabank, RBC, TD, CIBC||Canwise Dominion Lending|
|Pros||You can consolidate your services with a provider you have a relationship with.||Brokers shop around and negotiate for you, giving you the lowest rate on the market|
|Cons||Even with the afromentioned relationships, banks are only going to present you with their products and rates. You are responsible for negotiating discounts on their posted rates.||To get the lowest rate you may have to work with a provider that is not your primary bank. Remember you will still be able to set up auto-payments from your primary chequing account.|
Mortgage brokers work with a number of different lenders when helping you finance your mortgage:
The type of mortgage and rate you’ll get is largely based on your credit score. In Canada, your credit score can range from 300–900 and can be grouped in the categories below: