Mortgage Broker vs. Bank: Should You Go Direct or Use a Broker?
When it comes to getting a mortgage in Canada, one of the first decisions a homebuyer faces is whether to work directly with a bank or go through a mortgage broker. While both routes can ultimately land you in a home, the experience, flexibility, and terms can differ significantly.
Let’s explore the pros and cons of each based on our own professional advice and the practical experiences of Canadian homebuyers and brokers.
What’s the Difference Between a Mortgage Broker and a Bank Mortgage Specialist?
A bank mortgage specialist works for a specific bank and only offers that bank’s mortgage products. A mortgage broker, on the other hand, is an independent agent licensed to work with many lenders — including big banks, credit unions, monoline lenders, and alternative or private lenders.
Pros of Using a Mortgage Broker
✅ Access to More Lenders and Products
Mortgage brokers shop the market on your behalf. This means they can compare rates and products from dozens of lenders — not just one institution. Whether you’re a traditional employee or self-employed, whether you have perfect credit or less-than-ideal finances, brokers often have a suitable match.
✅ Competitive Rates and Cashback Offers
Some brokers, especially those with strong lender relationships or who belong to larger broker networks, can access rate specials or cashback incentives that aren’t publicly advertised. One broker on Reddit noted they secured $12,000 cashback for a client — compared to only $3,000 directly from a bank.
✅ Better for Unique or Challenged Applications
If you don’t qualify for a conventional mortgage — for example, if you're self-employed, new to Canada, or have bruised credit — a broker can explore B-lenders or private options, which banks won’t offer directly.
✅ Expertise and Personalized Service
A good mortgage broker doesn’t just quote rates — they guide you through documentation, underwrite the deal, and strategize to help you qualify. They’re often available outside 9–5 hours and more responsive than bank employees with high turnover.
✅ No Cost to You (Usually)
In most cases, brokers are paid by the lender, not the borrower. While some edge cases (like private mortgages or commercial deals) may involve broker fees, residential buyers typically don’t pay anything out of pocket.
Cons of Using a Mortgage Broker
❌ Potential for Broker Fees (Rare but Possible)
Some specialized or non-prime situations may involve fees. While rare, always ask upfront about compensation.
❌ Quality Varies Between Brokers
Not all brokers are created equal. As one Reddit commenter said, “it depends which broker you go with.” An inexperienced broker or one without access to a large lender network may not add much value.
❌ Less Direct Communication With the Lender
When you work through a broker, the broker becomes your main point of contact. You may not interact directly with the lender until final approval or funding. Some buyers prefer more direct visibility into the process.
Pros of Going Directly to the Bank
✅ Simplicity and Familiarity
If you’re already a customer of a major bank like Scotiabank or RBC, going direct can feel more familiar and straightforward. You can often bundle banking products and handle everything under one roof.
✅ Potential Loyalty Discounts
Some banks offer perks or lower rates to long-time clients. If you have significant deposits, investments, or other products, this may work in your favour.
✅ One-Stop Shop for Financial Products
Need a mortgage, chequing account, line of credit, and credit card? A bank specialist can help with everything, offering package deals or incentives for bundling.
Cons of Going Directly to the Bank
❌ Limited Product Options
A bank can only offer its own mortgage products. You won’t know if a better rate or more flexible terms exist elsewhere — unless you comparison shop manually.
As one Reddit commenter said:
“A bank only offers you their best deal. A broker can offer you any best deal.”
❌ Less Flexibility for Non-Traditional Borrowers
Banks often have stricter underwriting guidelines. If you don’t fit their boxes — for example, you're self-employed without two years of income history — they may simply decline you.
❌ Prepayment Penalties Can Be High
Bank mortgages often come with steep penalties for breaking your mortgage early, especially on fixed-rate terms. These are calculated using the Interest Rate Differential (IRD), which can cost thousands. Brokers, in contrast, can suggest lenders with more forgiving penalty structures.
❌ Turnover and Inconsistency
One Reddit user pointed out:
“The person you deal with today might not be there in a year or two — especially in a larger city.”
This can make continuity and long-term service difficult.
Prepayment Penalties: A Deeper Look
Many Canadian homebuyers don’t realize how costly it can be to pay off a mortgage early. With banks, this often means choosing between:
Three months’ interest
Interest Rate Differential (IRD)
IRD can be especially punishing in a low-interest environment, where you locked in a higher rate and want to refinance later. Brokers can guide you to lenders that offer open terms, more reasonable breakage fees, or portable mortgages that let you move the loan to a new property.
Get Professional Advice
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Final Thoughts: Should You Use a Mortgage Broker or a Bank?
Here’s the bottom line, based on your situation:
If you want the lowest possible rate: Go with a Mortgage Broker
If you have unique or non-traditional income: A Mortgage Broker is better equipped
If you want personal, one-on-one support throughout the process: Choose a Mortgage Broker
If you value existing relationships and want to bundle services (like credit cards, lines of credit, etc.): Stick with your Bank
If you have excellent credit and already bank where you want the mortgage: Either option can work — compare offers
Still unsure?
Talking to a mortgage broker is usually a no-risk first step. They can let you know if they can beat your bank’s offer. And if they can’t, at least you walk away confident you’ve explored your options.One Last Tip:
If you are already leaning toward a specific bank (e.g. Scotiabank), ask a broker if they can place the deal with that bank. Many brokers have access to the same major banks, and may still be able to negotiate a better rate than you could get walking in yourself.
