Many people wish to buy a home in Canada. Do you also want the same? Are you already looking for a new home in Canada? After saving money for years, you can solely pay the house’s down payment. For the remaining house amount, you will need to go to the banks for home loans.
The finance industry has seen a significant success slant, indicating an economic boon. Now you can also contact mortgage brokers to get loans at much lower interest rates. Nonetheless, the concern about Mortgage Broker Vs. Banks remain the same. Many people fail to calculate the principal amount and interest amount before getting home loans. Therefore, it is high time for you to understand the difference between banks and mortgage brokers in Canada.
What is the difference between Banks and Mortgage Brokers?
Banks are financial institutions licensed to make loans and receive deposits. They offer many financial services like safe deposit boxes, currency exchange, and wealth management. The central bank or national government governs such institutions.
On the other hand, mortgage brokers are solely mediators who arrange loans between lenders and you. In evolved mortgage markets like Canada and Spain, mortgage brokers have become the largest seller of loan products for countless lenders. They work for you to find a suitable bank or direct lender. However, you generally pay directly to the mortgage brokers in Canada. The brokers never charge you anything for good credit scores.
What is the difference between Banks and Mortgage Brokers?
The points listed below will illustrate the essential difference between a bank and a mortgage broker. It will also help you to make informed decisions.
| Mortgage Broker | Bank |
Market Share | 47% | 53% |
Description | A certified mortgage broker with access to numerous mortgage rates and lenders. You pay the mortgage product’s commission to the broker. | A chartered financial institution with mortgage, loan, credit card, and personal banking services. |
Lender | No | Yes |
Arrange the application | Yes | Yes |
Examples | CanWise Financial, Safebridge Financial, Dominion Lending, and The Mortgage Center. | Tangerine, Scotia, CIBC, BMO, RBC, and TD. |
The Pros and Cons of Banks:
As mentioned previously, the banks are chartered financial institutions that give you mortgage services according to your credit score. Now let’s check out the benefits and drawbacks of banks on the mortgage for your new home:
Pros:
- Relationship: A cordial relationship between your bank and you may be already established.
- Options: Banks can provide you with a gamut of mortgage services and a more comprehensive financial view.
- Easy Application Process: An ease in application filling as your bank already has your personal details, transaction history, credit score, etc.
- Stability: Gives you a sound and peaceful mind on months of financial instability.
Cons:
- Knowledge: Bank officials generally do not possess complete mortgage information.
- Criteria: Your bank may need to fulfil the federal underwriting standards to help you with financial instability.
The Pros and Cons of Mortgage Brokers:
As mentioned earlier, the mortgage brokers are merely intermediaries who connect you with lenders for mortgage services. If you are a resident of Canada, you will have to pay your mortgage broker instead of the lender. Now let’s check the pros and cons of mortgage brokers.
Pros:
- Solutions: Provide you with a one-stop solution as a one-time application form filling service.
- Interest Rate: Give better and a lower rate of interest than reputed banks.
- Knowledge: The mortgage experts possess essential know-how of various mortgage services.
- Quotation: You can get separate mortgage quotations with lower interest rates.
- Ease Approval: Provide mortgages to people with low credit scores or approval-issues with banks.
Cons:
- Late-Payment: The charges of late-payment is generally high than the banks.
- Stability: You will rarely get relief in case of financial stability.
- Government Association: No government financial institution stays accountable for your mortgage and shared banking information.
Conclusion:
If you are potentially thinking about buying a new house in Canada, you must know the benefits and drawbacks of banks and mortgage brokers. Choosing a mortgage source or service is essential to weigh down the cons and pros of mortgages and future financial stability. You have plenty of options in both banks and mortgage brokers in Canada. Besides, you can contact financial or mortgage experts to avoid any mistakes while procuring mortgage services.
