Buying a home is the biggest investment you’ll ever make in life. It’s also one of the most stressful. Dealing with mountains of paperwork, endless bargaining, and making sense of lenders' jargon can push home buyers to the brink of sanity. Luckily, the job isn’t all yours - you can get help from either banks or brokers. But which one is the best fit for your needs? In this blog post, we’ll explore the options and suggest some handy tips to help you make an informed choice.

Traditional Banks

Most people think of banks first when looking for a mortgage. Perhaps because they trust their bank, they’ve been banking there for years, or they’ve heard that banks offer lower interest rates. While that may be true, there are some potential pitfalls. Banks only offer their own products – they aren’t likely to shop around for the best rate or terms for you. And the bigger the bank, the bigger the bureaucracy involved - you may have to wait longer and go through more hoops just to get an answer.

Mortgage Brokers

A mortgage broker is a third party who shops your mortgage application around to see who can offer you the best rate and terms. That sounds great! But doesn’t it seem odd they could get a better rate than the bank that provided their financing? The fact is, however, that brokers deal with multiple lenders in Ontario, have a deep understanding of the Canadian mortgage market and can find unique solutions to meet different clients’ needs.

What Should You Consider?

So, which option should you choose? Here are some factors to consider:

1. Lines of credit and other banking products

Do you have multiple accounts with a traditional bank already? Do you prefer to work with a single lender? Banks offer a variety of products, beyond just mortgages; they might be able to offer loyalty benefits or bundled discounts. Brokers, on the other hand, specialize in mortgages only.

2. Time and effort required

If you don’t like picking up the phone or stalking people online for answers, a broker could be a better fit for you. Brokers know the lenders, the policies, and the rates. They can simplify the process for you and be your one-stop-shop.

3. Interest rates and fees

While interest rates shouldn’t be the only thing you consider when choosing a mortgage, they do matter. Brokers claim to offer lower interest rates than banks most of the time, but that is not necessarily true. In any case, you should ask for detailed fee schedules and interest rate comparisons charts for each option to compare.

4. Your credit score

Do you have a good or bad credit score? If your credit isn’t spotless, chances are your loan application will have some challenges. Lenders can be picky. However, working with a mortgage broker may increase your chance of approval for a loan because they market your application to multiple lenders. Brokers can match your credit score with lenders that are more likely to approve your loan.

In the end, both banks and mortgage brokers have their advantages and disadvantages. The best solution will depend on your circumstances, needs, goals, and preferences. If you prefer simplicity, consider banks. If you require more options and flexibility, work with a broker. The main benefit of working with a broker is saving time and effort. By doing so, the broker can help you to get the best available offer for your situation. So, choose wisely, and welcome home!

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