When it’s time to get a mortgage, most Ontarians start at their own bank. It’s familiar, and you already have an account there. But a growing share of Canadians now arrange their mortgage through a mortgage agent or broker instead. What’s the actual difference, and which is right for you?
How a Bank Mortgage Works
When you get a mortgage at a bank branch, you’re working with a mortgage specialist who is an employee of that bank. They can only offer that bank’s products, rates and approval rules. If the bank says no, or its rate isn’t competitive, you have to start over somewhere else.
Pros:
- Convenient if you already bank there
- Some banks offer bundled products, such as a mortgage combined with a HELOC
- Possible relationship discounts
Cons:
- Only one lender’s products and rates
- Each application at a new bank usually means another credit check
- Approval rules can be strict for self-employed borrowers, newcomers or anyone with bruised credit
How a Mortgage Agent Works
In Ontario, mortgage agents and mortgage brokers are licensed by the Financial Services Regulatory Authority of Ontario (FSRA). Agents work under a licensed mortgage brokerage. Instead of representing one lender, we compare options across many:
- Major banks that work with mortgage professionals
- Credit unions
- Monoline lenders, which offer only mortgages and are often available only through agents and brokers
- Alternative (“B”) lenders for non-traditional income or credit situations
- Private lenders for short-term or special situations
We collect your information once, review your full situation, and match you with the lenders most likely to approve you on the best terms.
The Key Differences
1. Choice
A bank offers one menu. A mortgage agent can compare dozens of lenders, which matters most when your situation isn’t straightforward.
2. Terms, not just the rate
The lowest rate isn’t always the best mortgage. Prepayment privileges, portability, and especially how the lender calculates your penalty if you break the mortgage early can matter more than a small rate difference. Some lenders calculate fixed-rate penalties in ways that can cost thousands more than others. An agent will compare these details for you.
3. Cost to you
For most residential mortgages with prime lenders, the lender pays the agent’s compensation, so there’s no cost to you. In some cases, usually private or alternative lending, a broker fee may apply. In Ontario, brokerages must disclose any fees, compensation and conflicts of interest to you in writing before you commit.
4. Approval flexibility
Self-employed, new to Canada, recently changed jobs, rental income, or a past credit issue? Banks have one set of rules. An agent knows which lenders are flexible on each of those situations.
5. Who you’re working with
A bank specialist works for the bank. A mortgage agent works with you to find the best fit across lenders, and stays with you for future renewals and refinances. That means you aren’t stuck with the bank’s renewal offer.
When Going Straight to Your Bank Might Make Sense
- Your bank offers an exclusive product or relationship discount that you’ve confirmed beats the market
- You need a specific bundled product that’s only available in branch
Even then, it’s worth getting a second opinion. Many of our clients use our quote to negotiate, or simply confirm they’re getting a fair deal.
Common Myths
“Agents and brokers only work with people who have bad credit.” Not true. Most of our clients have strong credit and simply want the best terms.
“Using an agent costs more.” For most residential mortgages, it costs you nothing, and the savings from better terms can be significant.
“My bank will give me the same rate.” Sometimes they will, especially once you show them a competing offer. That’s exactly why it pays to compare.
How to Check Your Mortgage Agent Is Licensed
Every mortgage agent and brokerage in Ontario must be licensed by FSRA, and you can look them up on FSRA’s public licence registry. Our details: Paul Oosh, Mortgage Agent, Licence #M25002936, with Breezeful, Brokerage Licence #13470.
Get a Second Opinion
Whether you’re buying your first home, refinancing or renewing, we’ll compare your bank’s offer against the wider market, with no obligation. Learn more about Trilith Mortgages, or book a free discovery call or call (647) 409-5155.
This article is for general information only and is not financial, tax or legal advice. Mortgage rules, rates and government programs change, so please speak with a licensed professional about your situation. Trilith Mortgages: Paul Oosh, Mortgage Agent, FSRA Licence #M25002936. Brokerage: Breezeful, FSRA Licence #13470.