Bank Vs. Mortgage Broker – What is the difference?

Transcribed from the Michal Sluka / Michael Huber YouTube Video – see below for written, condensed version.  Kelowna, BC

Here are some of the key differences between a bank and professional mortgage broker.

1) Familiarity

  • Banks have bricks and mortar shops on the local street corner to give advice and receive questions

  •  A mortgage Broker is your direct contact for any information you may need on your mortgage and, as well, immediate customer service is available through telephone and online internet lender portals.

2) Product Line

  • Banks have a singular product line and a single set of approval guidelines.  If you are declined for a mortgage at a bank this does not mean that you can’t get approval with another lender.

  • Mortgage Brokers have access to banks, credit unions and product specific mortgage companies.  This means that your mortgage application can be tailored to fit the lender that will be best for your specific situation.  I have had past clients declined at their bank who were able to receive approval for best rate financing with another lender just because of different lending guidelines.

3) Rates

  • Rates are very similar between banks, credit unions and mortgage companies.  All receive their lending funds from the same investment pool of “A” money.

4) Terms and Conditions

  • Bank pre-payment penalties are much higher than those with mortgage brokers, potentially costing you thousands if you break your bank mortgage before the end of the mortgage term.  65% of Canadians break their mortgage before the end of term costing them thousands of dollars.

  • Click HERE to read a recent article discussing the penalty cost differences

5) Compensation

  • Bank employees are compensated by the bank with bonuses enhanced by selling higher rates

  • Mortgage broker is paid by the lending institution; you pay nothing for a mortgage brokers services.

Want a second opinion on this article?  Check out the Huffington Post’s article HERE

Thank you very much for reading.  Please share :)

One of my hobbies is blogging about mortgages, debt and government policy.  During the day I’m a MORTGAGE BROKER in Kelowna, BC!

To learn more about the Okanagan 2020 Economic Forecast, CLICK HERE.

Check out the Huber Mortgage Home Buyers Guide HERE

Sincerely,

Michael

Huber Mortgage logo black