If you live in Toronto, Mississauga, Barrie or Scarborough and are looking for a mortgage or home equity loan, you might choose to go to your local bank or other large Ontario lending institution. Alternatively, you might opt to arrange the mortgage or home equity financing through a mortgage broker. So what are the inherent differences in the two methods of obtaining a mortgage?
Bank Loan Officers
The loan officers at a bank, credit union or other lending institution are employees whose job it is to sell and process mortgages, equity financing and other loans originating with the institution who employs them. In dealing with a bank you only deal with one lender. CIBC loan officers are not going to recommend BOM products or those of any other competitor. So while each 'Big Bank' may have a wide variety of loans types in their portfolio, all are the financial products of that particular lender.
The mortgage broker is not an employee, but a freelance agent. A mortgage broker counsels you on the loans available from different lenders, takes your application, and usually processes the loan which involves putting together the complete file of information about your transaction including the credit report, appraisal, verification of your employment and assets, and so on. And it is the lender who shows up at the closing table with the money, not the mortgage broker.
A mortgage broker receives daily updates on interest rate nationwide. Your mortgage can be obtained from an institution with the most favourable rate - this could be locally in Toronto, Mississauga, Barrie or Scarborough, provincially anywhere in Ontario or anywhere Canada. As the mortgage broker is doing the 'leg-work', you don't have to spend the time and energy searching for the lowest rate yourself.
An additional advantage of working with a mortgage broker rather than a single institution is that an established mortgage broker such as Capital Direct conducts a high volume of business with several institutions. The result is that the mortgage broker may receive additional benefits, such as lower interest rate and fast approvals that can benefit the mortgage borrower. Finally, a mortgage broker can often find a lender who will make mortgage or home equity loans that a bank refuses.