A mortgage broker is not the only road you can take to get a mortgage. Some people who are not aware of all the options available will only visit their bank to review mortgage options. Or they will visit a bank to compare what they have found with a mortgage broker.
Getting a mortgage directly through your bank has some pros and cons.
You have access to a bank branch that you can visit anytime during your mortgage term
You may have a relationship with a current bank adviser who knows your finances
Some major banks only offer their mortgages through their branches and therefore to have that option you need to visit the bank directly
You will not be able to compare the bank’s rate with other rates
There is small selection of lenders and products as there is only one lender
They may cross sell you on other mortgage products such as mortgage protector insurance
They may cross sell you on other banking products such as bank accounts, credit cards, etc. during your mortgage visit
You may get a biased opinion on if this product is good or not
A biased opinion
This is similar to if you call 10 restaurants and asked if they have the best food or a hotel and asked if they had the best beds. For some strange reason, they will mostly likely all say yes. A bank will not tell you when they have an unfavourable mortgage product for your needs and that it’s best to try another company.
Also, a bank representative will most likely be penalized or let go, if they are caught recommending you go to another bank or lender if they are aware of a better deal there. If a bank staff member tells you to switch your business to another bank as the other bank has lower rates, the staff member would most likely will be disciplined. With that, we can see instantly that the bank staff member may not be working with in your best interest in mind.
In many bank roles, the staff member’s bonuses and income align with the pricing they offer on products. The more discounts they give, the less they make.
The shareholder comes first
A bank’s clients are the shareholders. You are the customer that is there to create value for the bank’s clients, the shareholders. The bank’s main responsibility is to service their clients. With this, to create as much profit as possible for their clients. If you own stock in the bank, you as well would want them to be charging higher interest rates and offering more products to customers so that the stock can go up. Then you make more money as a shareholder.
Unfortunately it is the customer who walks through the door that is the one who helps create these profits. A great question to ask yourself is, when was the last time your bank called you to lower your fees and rates as a courtesy?
Banks come with a quite a bit of overhead such as electricity, staff wages, the building and more. Just like buying a product at a store may come with a higher price than buying the product online such as through Amazon. Getting your bank mortgage through a bank branch may come at a higher rate than getting the same bank mortgage through a mortgage broker. Mortgage agents do have access to banks as well. They have access to TD Canada Trust, Scotiabank and more. Typically the rate you will see from a bank through a mortgage broker will be lower than the rate you will be receive from your bank.
A longer process
To complete a mortgage with your bank branch, you will need to visit the branch three to four times throughout the mortgage process. Typically for an hour each time. This can be quite a long process. Usually clients will need to meet with the bank at the pre approval stage. Also, once they’ve made an offer, and to either bring the documents in or sign the mortgage package once approved. Some banks are only open during business hours with reduced hours on weekends and this means that you are taking time away from work in order to obtain a mortgage or time out of your evenings and weekends.
Mortgage agents can work around the clock on your time and at your location. If you want a big bank mortgage are not happy with the bank’s hours of operation, getting the bank mortgage through a mortgage broker can help extend the hours.