When shopping around for a mortgage, your local bank is the first place you are likely to go to. Banks are seen as Ontario’s primary source of mortgages and are also known as A Lenders. But, they’re not the only option to take a mortgage application to. You can also visit B and C lenders depending on your credit score and needs. This is where mortgage brokers come in. They can take your application to lenders outside of a bank, which they can’t do. 

So, the question many borrowers ask is, should I use a mortgage broker or go to the bank? Let’s break down what each offers you to help determine which method is right for you.

The Banks

When working with a bank for your mortgage, you are building a long-lasting relationship. Often, you go to the bank that you do your daily banking with. You don’t have to, as every bank is open to you for mortgages, but it is common for borrowers to first get rates and apply through their home bank. Banks also offer a wide variety of services that mortgage brokers do not. You can apply for credit cards, other loans, insurance, and of course do day-to-day banking.

As federally regulated lenders, banks have higher requirement thresholds for borrowers to meet in order to get approved. The big one is the stress test, which can be difficult to pass in the current economic climate. They prefer lower risk lenders with high credit scores, which means if you have bruised credit it can be harder to be approved through a bank. Bank policies are often strict and ultimately may make it difficult for you to get approved.

Mortgage Brokers

A broker is your liaison to shop your application around to a network of lenders beyond the banks, but can also include them in your search. They do the work for you and are great sources of mortgage advice. A broker works to find you the lowest rates possible and saves you time by doing the research and shopping around on your behalf.

They help guide you through the process on a more personal level than a bank, will negotiate on your behalf, and compare products for you. Unlike banks, Mortgage Brokers can access a wide variety of B and C lenders. These consist of credit unions, private lenders, and other institutions that are not banks or are controlled federally. Thus, there is more flexibility and options available for you to look at. However, you don’t always need a broker to submit mortgage applications to some of these lenders, though it definitely makes your job easier to use one.

Now, Who Do You Work With?

Each option has a list of pros and cons for you to consider. Ultimately, it comes down to your personal situation and which choice is better for you. If you have a strong credit score and are more aware of what your mortgage needs are, then going with a bank is probably the best option. With the bank, you can easily access their other product offerings that can complement your mortgage or help with day-to-day financial activities. If you already have a strong relationship with your bank from daily banking, then it makes sense to use them as your mortgage source as well.

That being said, if you don’t have the strongest credit score, or have a less-than-stable financial situation, a bank is highly unlikely to approve your application. This is where the mortgage broker is the better option. Since mortgage brokers will take your application to lenders with less strict requirements, you’re more likely to get approved for the funding you need. Further, if you are self-employed and are lower-income, working with a mortgage broker would be the better option in finding a mortgage you can be approved for.

If you are looking for a professional mortgage broker in Ottawa to help your mortgage application process, The Mills Team has the experience and tools you need to find the right mortgage for you with the lowest rates and best terms available.