Real Estate

Is getting mortgage through mortgage broker better than bank ?

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  • Jan 11th, 2021 11:57 pm
[OP]
Newbie
Mar 27, 2020
14 posts
6 upvotes

Is getting mortgage through mortgage broker better than bank ?

Hello,

I am a first home buyer and have a few questions.

#1. Would it be beneficial to get mortgage from mortgage broker than main bank (TD, RBC, BMO and etc) ?
I found the rate is usually much lower with the broker's.

#2. I know the mortgage brokers usually lend money from wholesale / direct / private lender , not from main bank.
Will there be any risk if we get mortgage from wholesale/direct/private lender ? I think there might be more risk than getting from main banks.

#3. In Canada, are there any mortgage broker fees ? Currently I am residing Toronto area. It looks like most of mortgage brokers do not charge for any fees but just want to double check.
11 replies
Deal Guru
User avatar
Mar 23, 2008
12096 posts
8397 upvotes
Edmonton
bahngmin636964037769838600 wrote: Hello,

I am a first home buyer and have a few questions.

#1. Would it be beneficial to get mortgage from mortgage broker than main bank (TD, RBC, BMO and etc) ?
I found the rate is usually much lower with the broker's.

#2. I know the mortgage brokers usually lend money from wholesale / direct / private lender , not from main bank.
Will there be any risk if we get mortgage from wholesale/direct/private lender ? I think there might be more risk than getting from main banks.

#3. In Canada, are there any mortgage broker fees ? Currently I am residing Toronto area. It looks like most of mortgage brokers do not charge for any fees but just want to double check.
I think you're mis-informed about your point #2, which in turn nullifies point #1. The big banks are often presented as lenders by brokers, and you can get a standard mortgage through them. And you would want to clarify #3 with whatever broker you deal with. It may also depend on whether you end up getting a mortgage through a private lender (via broker) or a bank. There can be a number of extra fees as you move down the lender ladder.

C
Deal Addict
Jan 15, 2017
3927 posts
3391 upvotes
1. Whether it is more beneficial depends on how well the mortgage meets your needs. One thing to be aware of is that the big banks generally have the worst pre-payment fees on their fixed rate mortgages. I know that thinking you might break a mortgage may seem out to lunch as a first time home buyer, but many people do actually break mortgages.

2. Mortgage brokers have a host of lenders. They have access to some of the big banks as well as what's known as mono lenders. These are large mortgage lenders that can only be accessed through brokers. Some of these mono lenders have great rates and great mortgage terms that surpass the big banks. And yes, mortgage lenders also have access to private lenders. There is little risk from having a mortgage from the big banks or a mono lender. There are risks from a private lender that you should discuss with your mortgage broker. Private lenders tend to be the lender of last resort so unless your application is very challenging in some way, chances are you won't use a private lender.

3. Check out this link for more information on fees and regulation of mortgage brokers in ON: http://www.fsco.gov.on.ca/en/mortgage/P ... fault.aspx
Jr. Member
Dec 5, 2017
194 posts
154 upvotes
I have always found the rates from the big banks to be the exact same as going with a broker. But you may need to ask for the better rate with a big bank. Not so with a broker.

I stay away from brokers as I got screwed over one time, which cost me ~1.5% increase on my mortgage interest rate. Still pissed about that and that was during the 2008 financial crisis. I got a lazy broker and his excuse was that he thought mortgage rates only go down.
Deal Fanatic
User avatar
Feb 2, 2014
8780 posts
2515 upvotes
Toronto
bahngmin636964037769838600 wrote: Hello,

I am a first home buyer and have a few questions.

#1. Would it be beneficial to get mortgage from mortgage broker than main bank (TD, RBC, BMO and etc) ?
I found the rate is usually much lower with the broker's.

#2. I know the mortgage brokers usually lend money from wholesale / direct / private lender , not from main bank.
Will there be any risk if we get mortgage from wholesale/direct/private lender ? I think there might be more risk than getting from main banks.

#3. In Canada, are there any mortgage broker fees ? Currently I am residing Toronto area. It looks like most of mortgage brokers do not charge for any fees but just want to double check.
You have some false information on the way brokers work. We do in fact work with the Big Banks as well (most brokers have access to TD and Scotia at least). Brokers work with some of the Big Banks, credit unions, trust companies, monoline lenders, and private lenders. Not sure what a wholesale lender is.

No broker fees on the A side.

Rates start at 1.39% 5-year fixed and 1.25% 5-year variable right now via the broker channel.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Deal Addict
Mar 2, 2017
1420 posts
2601 upvotes
Toronto
I am not sure why anyone would go with a bank when a broker offers you the most competitive products/rates based on your situation and cross shops all banks. This seems to be widely misunderstood on this forum, I don't know why the mortgage brokers aren't informing the forum about this.

My broker has all the banks*, the only bank that's a turd and does exclusives only is RBC. I am not in this space, maybe things have changed. Someone should correct me if wrong.
Realtor, Investor, CPA
Sr. Member
Jan 1, 2009
835 posts
443 upvotes
RichmondCA wrote: I am not sure why anyone would go with a bank when a broker offers you the most competitive products/rates based on your situation and cross shops all banks. This seems to be widely misunderstood on this forum, I don't know why the mortgage brokers aren't informing the forum about this.

My broker has all the banks*, the only bank that's a turd and does exclusives only is RBC. I am not in this space, maybe things have changed. Someone should correct me if wrong.
I think most ppl go to banks for convenience and the fact they are more comfortable with them. Getting a mortgage broker is also random there can be great ones that go above and beyond and there are crap ones who either have little to no knowledge or they are looking out for there own interests rather than yours. The mortgage brokers here on RFD are good cause they are held accountable in the forums because if they want more business they will do right by you.
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Banned
Jul 10, 2020
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RichmondCA wrote: I am not sure why anyone would go with a bank when a broker offers you the most competitive products/rates based on your situation and cross shops all banks. This seems to be widely misunderstood on this forum, I don't know why the mortgage brokers aren't informing the forum about this.

My broker has all the banks*, the only bank that's a turd and does exclusives only is RBC. I am not in this space, maybe things have changed. Someone should correct me if wrong.
Not to beat a dead horse, but that's not true.
Many of the major banks cut ties to brokers and don't work with them.
Right now, as the broker above mentioned - the only major banks that work with independent brokers are Scotiabank and TD.
CIBC/RY/BMO all work with their in-house 'mortgage advisors' only.
Scotia has 'mortgage advisors' as well.
All the banks offer mortgages in the branch.

To be honest in branch banking channel offers fairly competitive rates. And, I find in some cases the major lenders (all major 5 banks) have easier qualification criteria for SALARIED employees. For example, with Scotiabank you only need payslips and direct deposit for most salary employees (branch channel).

While going through a broker, to say another lender- e.g. First National, you would need NOA + payslips + t4s + direct deposit. (these rules vary lender to lender, but major banks are the easiest with salaried employees).
I'm sure some will debate this, but this has been my experience.
Deal Addict
Mar 2, 2017
1420 posts
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Toronto
pokemoncollector wrote: Not to beat a dead horse, but that's not true.
Many of the major banks cut ties to brokers and don't work with them.
Right now, as the broker above mentioned - the only major banks that work with independent brokers are Scotiabank and TD.
CIBC/RY/BMO all work with their in-house 'mortgage advisors' only.
Scotia has 'mortgage advisors' as well.
All the banks offer mortgages in the branch.

To be honest in branch banking channel offers fairly competitive rates. And, I find in some cases the major lenders (all major 5 banks) have easier qualification criteria for SALARIED employees. For example, with Scotiabank you only need payslips and direct deposit for most salary employees (branch channel).

While going through a broker, to say another lender- e.g. First National, you would need NOA + payslips + t4s + direct deposit. (these rules vary lender to lender, but major banks are the easiest with salaried employees).
I'm sure some will debate this, but this has been my experience.

Thanks for the info, like I said I haven't looked into this in a while and want the latest info for my own knowledge. Do you know when major banks cut ties with brokers? Was this recent (last couple of years)?
Realtor, Investor, CPA
Banned
Jul 10, 2020
193 posts
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RichmondCA wrote: Thanks for the info, like I said I haven't looked into this in a while and want the latest info for my own knowledge. Do you know when major banks cut ties with brokers? Was this recent (last couple of years)?
in the last 5-7 years or so is my understanding. Scotia is really the last one that genuinely works with brokers (or cares too) from what I understood. I heard TD wasn't as 'nice' with their broker channel connections, but that's anecdotal.
Deal Addict
User avatar
Apr 12, 2013
2011 posts
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Moon
There are deals with banks that you can only get directly with them but for the most part the benefits only apply if you're a big customer.

I also had a tight closing and a few brokers told me because of the bank backlog they would not respond to my application in time. I contacted a specialist at my bank and was approved in 48 hours.

However DO NOT do separate applications with different banks though, each one is a hard hit.
Koodo, Public Mobile, Lucky Mobile Customer
Sr. Member
Nov 6, 2015
955 posts
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Guelph, ON
bahngmin636964037769838600 wrote: I think there might be more risk than getting from main banks.
What could the risk be, that they flee the country with your debt and you never hear from them again?

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