Banks Vs. Mortgage Brokers – Which Is The Better Option?
With mortgage rates being at 20 year highs, homeowners are keen to find a competitive mortgage rate for their new home or mortgage renewal. There are 2 main options when looking to secure a mortgage: going to a bank or to a mortgage broker.
What is the difference and which is better?
A bank can give you the mortgage option from their own company and their rates are pretty much fixed and their product offerings are standard, whereas mortgage brokers have access to a variety of lenders and rates, can come up with a blend of products, and because they acquire high quantities of mortgage products, can pass on volume discounts to you.
Advantage of banks
- If you have worked with a bank for a long period, you have built a relationship and there is a period of trust which can add familiarity to the mortgage process, and this can be comforting, especially in these periods of interest rate volatility.
- You can leverage your built up relationship to get a better rate.
Advantage of mortgage brokers
- A mortgage broker can offer and compare mortgage products and rates from multiple lenders.
- They only get paid if they secure the loan, so it is in their best interests to get you the best rate possible.
- If you have a poor credit rating, a mortgage broker has access to special programs and lenders who specialize in offering mortgages to those with lackluster credit histories.
- There is no fee involved as the mortgage broker gets a commission or referral fee from the lender.
Disadvantage of banks
- Banks usually have stricter conditions for approval, making it more challenging to get a mortgage approved.
- A bank will only be able to offer its in-house products which may not be as appealing as those offered by a mortgage broker.
Disadvantage of mortgage brokers
- Since you may not have a relationship with the broker, the process may take longer and require more paperwork. This could be a problem with tight deadlines.
- Not all lenders work with mortgage brokers, so you may have to shop around to find a better product.
It is important for you to understand the mortgage, regardless of where you are getting it from. Notwithstanding which option you are using, make sure you take time and do your research online and compare lenders. This can be used as leverage if your bank or mortgage provider does not provide you with the rate you are expecting.
We have experienced real estate advisors who can direct you to the best option for getting your mortgage. So, if you have not secured your mortgage or are exploring other options and need a company to refer you to a competitive rate, contact us.