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January 11, 2019 Kristen Godel

Mortgage Broker vs. Direct Lender

Many people wonder what a mortgage broker does compared to just going directly to the lender. In fact, there’s a misconception that a mortgage broker is someone you go to when the banks say no. This is probably due to the fact that the mortgage industry has positioned itself as such.

However, the truth is that a mortgage broker is in a better position to help you regardless of whether the bank will approve a mortgage or not. This is due to the fact that a mortgage broker has access and relationships with multiple lenders and categories of lenders that have different lending guidelines from one another. These relationships with lenders include those that are comparable to products offered by the banks, to lenders that approve applicants who would not otherwise qualify through the major banks.

The direct lender that most people go to is the major banks of whom they typically hold existing bank accounts with. The perceived advantage of going to the direct lender is that people believe they would get approved automatically because they hold tenure or a long relationship with their bank. The truth however, is that those who get approved through these institutions do so because they qualify and not because they have been with the bank for 20 years. Otherwise, those that have been of the bank for over 30 years would have also been approved if they didn’t qualify.  It’s also important to note that the bank can only offer you what is available internally as far are the type of mortgages and the respective interest rates go. This is a highly limiting factor and allows for the greater possibility of not getting the best mortgage solution that would otherwise be available in the market.

A mortgage broker on the other hand, would have access to the same class of lenders that you would qualify for, with the likelihood that your bank is also on the list. The benefit would be that the mortgage broker is not limited by dealing with one lender and their respective “product sheet” and if they are not offering the best solution for your needs, the mortgage broker would simply take the application over to the competitor who have more favorable offerings at any given time. As mentioned earlier, a mortgage broker also has access to other classes of lenders that would approve your application if your file didn’t otherwise meet the traditional guidelines.

So, although a mortgage broker is often approached when the banks deny an application, we are also available to offer solutions even when you would qualify regardless of what bank you hold your accounts with.

If you would like to learn more, please give us a call today 905.455.5005