Choosing between a mortgage broker and a bank will affect the mortgage options available to you, and each route has its own advantages and drawbacks. Below we explain the main differences and help you decide which option may best fit your financial situation.
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Mortgage brokers and banks: What’s the difference?
| Features | Mortgage brokers | Banks |
|---|---|---|
| Range of mortgages | Access to many lenders and multiple products, though not every lender works with brokers | Limited to the bank’s own mortgage products |
| Communication | Acts as your intermediary and represents your interests during the application | You deal directly with the lender or branch staff |
| Fees | Often paid by lender commission; some brokers may charge a client fee in specific cases | No separate broker fee charged to you |
| Approval likelihood | Can match your profile to lenders most likely to approve you, improving your chances | Larger banks usually have stricter lending criteria and can be selective |
When to get a mortgage from a bank or from a broker
The best choice depends on your financial profile, comfort level, and how much time you want to spend comparing options. A broker often provides broader access and negotiation help, while a bank can be convenient if you already have a banking relationship and a straightforward application.
Using a mortgage broker in Canada
Mortgage brokers—also called advisors or intermediaries—shop multiple lenders on your behalf. A skilled broker can identify competitive rates and lenders that suit your specific situation, whether you’re employed full-time, self-employed, a newcomer to Canada, or have a limited credit history.
Brokers stay current on market rates and product types, and they understand which lenders are more flexible with different applicant profiles. Some lenders are more willing to approve borrowers with irregular income or weaker credit; others specialize in prime borrowers only. If you are considered higher risk, expect higher interest rates or alternative lenders that accommodate those profiles.
Many brokers are compensated through commissions from lenders, frequently around 1% of the mortgage amount. In situations where a borrower must be placed with a non-prime lender, brokers may charge additional fees or seek borrower-paid commission, which varies by case. It’s reasonable to ask a broker upfront how they are paid and whether you will incur any fees.
Not all lenders accept applications through brokers. Several large institutions manage mortgages only through their own branches, so a broker’s access to every available rate is not guaranteed. Still, brokers typically can present a wider selection than a single bank branch and can simplify the application process.
Getting a mortgage from a bank
Many Canadians choose a bank for mortgages due to convenience, existing relationships, and the ability to speak with branch staff in person. If you have an established history and a strong credit profile, you may qualify for competitive rates directly through a bank. Banks tend to prefer low-risk borrowers and may be less flexible with applicants who have credit blemishes or complex income situations.
Getting a mortgage from a Big Six bank
The six dominant Canadian banks offer a broad range of mortgage products but generally cater to lower-risk borrowers. Their wide branch networks make in-person service easy, which some buyers value. If your finances are straightforward and your credit is strong, applying through a major bank can be a simple solution.
What are non-bank lenders?
Non-bank lenders are firms that focus primarily on mortgage lending rather than full-service banking. These lenders often provide both prime and non-prime mortgage options, and they can be more flexible in underwriting. For borrowers with impaired credit or unique circumstances, non-bank lenders may offer solutions that traditional banks won’t.
Subprime or alternative mortgages from these lenders may come with shorter initial terms or higher rates, with the expectation you’ll refinance into a standard product later if your credit improves.
How to save money on a mortgage
Comparison shopping is essential. Use reputable rate comparison tools and affordability calculators to understand how much mortgage you can responsibly carry. Check your credit report so you know where you stand before applying.
If you bank with a lender, ask about client discounts or loyalty rates. At the same time, brokers can often find competitive offers across many institutions and may save you time and money, particularly if your finances require a tailored approach.
Not all brokers are the same: some specialize in prime mortgages, others in alternative lending or investment-property financing. Seek referrals and read reviews to find a broker with experience relevant to your situation.
What to do before signing a mortgage contract
Carefully read the mortgage agreement and ask questions about anything unclear. Confirm the interest rate, all lender fees, and any administrative charges. Check your prepayment privileges—the amount you can overpay without penalty—which affects how quickly you can reduce principal.
Obtain or review a property survey or real property report to verify boundaries and identify potential issues. For condominium purchases, review the condominium corporation’s documents and fee structure to understand ongoing costs and rules.
Ensure any verbal promises are written into the contract, such as included appliances or repairs to be completed by the seller. Consider contingency planning for unexpected events: can you cover major repairs or survive a loss of income? Mortgage insurance or a guarantor can sometimes help reduce risk, but these options have costs and eligibility requirements.
Preparing for worst-case scenarios helps protect your financial stability and makes homeownership more manageable over the long term.
The best mortgage rates in Canada
Mortgage rates are influenced by the Bank of Canada’s policy interest rate and broader market conditions. In recent years, policy rates have moved significantly, which has put upward pressure on mortgage rates and affected affordability. Higher rates can lower borrowing capacity but may also reduce competition for homes and, in some markets, put downward pressure on prices.
When comparing rates, look beyond the headline rate to consider fees, flexibility, and features such as portability and prepayment options. A slightly higher rate with better terms may cost less over time than a low-rate product with strict penalties.
So, who do you go with: a broker or a bank?
If you are comfortable researching lenders and applying directly, and you qualify for competitive offers, going straight to a bank may be fine. For many borrowers, a mortgage broker delivers greater value by comparing multiple lenders, finding products suited to specific needs, and guiding applicants through the process. Regardless of the route you choose, comparison shopping and preparing your finances before applying will put you in the strongest position.
Read more about mortgages:
- Best 5-year fixed mortgage rates
- Best 5-year variable mortgage rates
- Best mortgage rates in Canada
- Mortgage down payment calculator