Banks vs Mortgage Brokers - Who should you work with?

Are you ready to buy your next property but still deciding if you should go to your bank or a mortgage broker?

Jared Chamberlain and Paul Moyer talk about the pros and cons of working with banks and mortgage brokers from their experience in helping clients buy their dream homes.

Many people, especially first-time home buyers, think it is easier to get a mortgage from their own bank as it already has their financial records, but that is not always the case! Even if you have had an account in a bank for several years, you will still need to submit paperwork to their mortgage personnel and go through a particular process.

In a simple scenario, where you only have one or two income streams, and little or no debts, the process could be easy and going to your bank is a straightforward solution. But if you have a diverse income portfolio, going to a bank may not be the best option for you.

Making Things Happen

Paul helped a family who had been renting a house for quite a while. Finally, they had saved up enough funds for a down payment to buy a home. They went to the bank they had been with for the last 30 years and got prequalified for a mortgage plan amounting to $175,000. But that was not enough for what they needed.

With the size of their family, they needed a house with at least 4-bedrooms. There is no way they can buy that kind of house for $175,000 in the current Calgary real estate market. Paul understood their needs and connected them to one of the mortgage brokers we work closely with to make things happen.

The mortgage broker looked closely into everything the client had. They actually had a few substantial income streams that they could use for pre-approval. After taking those additional income sources into account, they were told that they could spend up to $300,000!

Working with Banks Vs. Mortgage Brokers

Most banks have several mortgage products with specific criteria. If you don't fit cleanly into any of their products, it could be hard to get a pre-approval. On the other hand, mortgage brokers are not tied into the big five banks alone. They have connections to secondary lenders and are able to strategize with buyers on how to use all their resources to get the best mortgage plan.

Some banks or lenders take rental income or passive income as part of a client’s income because they are still part of their income even though they are inconsistent. That makes a big difference in working with a mortgage broker compared to a bank.

There are also some banks offering creative mortgage solutions. For example, RBC has a product called a homeland plan where you can have portions of your mortgage fixed and some in a line of credit. Scotia Bank has a similar program you can choose if you are considering that option.

Our team has worked with a lot of banks and has established a good relationship with some of their mortgage professionals. If you need help finding the right mortgage partner, we can connect you directly to bank representatives at Royal Bank, TD, Scotia and BMO. We also work closely with different mortgage brokers who can provide more options for those with complex financial needs.

This battle in getting a mortgage from banks versus mortgage brokers has been up for ages. As realtors, we can’t knock one and praise the other. The best choice depends on every client’s needs and situation.

If you want more information about mortgage providers and need our help in creating the right strategy for you, reach out to us at info@chamberlaingroup.ca or 587 316 5400.