Mortgage Broker Pros:

• They can meet you on your time or get most things done over the phone.– or if you go with an online broker they make it very easy to communicate via email, Skype, etc.

• You get to see all of your options and are basically guaranteed to get the lowest rate possible.

• They will take your financial information once and usually only pull “One credit rating report". Saving you from deteriorating your credit rating as you shop around from lender to lender.

• Brokers often have more flexibility in terms of getting you approved with non-traditional lenders.

• If full-contact negotiating isn’t your thing, have no fear, mortgage brokers will do the dirty work for you.

• They will sometimes pay for things like inspections or appraisals out of their own pocket.  The idea here is that they wish to secure your loyalty for the long term so that you’ll go back to them for your next mortgage term, as well as recommend their services to others

• Almost all do not charge a fee for their services.

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Mortgage Broker Cons

• The lenders that offer the best rates might not be in the same geographic location as you.

• The lenders that offer the best rates are sometimes smaller.  This lack of familiarity scares some people (but doesn’t make any real difference in the long run).

• You might not be able to sit down with the mortgage broker face-to-face.  Personally, this is a positive as I prefer to send an email anyway.

• Some mortgage brokers might be motivated to approve you for a loan that you shouldn’t get approved for simply so that they can snag the commission.  In theory, a major bank that has access to your full financial picture might be able to give you more personalized and better advice in this area.  I’m not sure this actually happens very often in practice, but it is a relevant consideration.

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Big Bank Loan Officer Pros

• Usually pretty flexible in adjusting to how you prefer to communicate, including face-to-face meetings.

• Canada’s major banks operate coast-to-coast, so a brick-and-mortar location is almost never too far away.

• You can use your mortgage as a big negotiating chip in your overall relationship with the bank.  In other words, you can demand free banking, a free safety deposit box, or other perks, in exchange for bringing a large part of your business over to them.

• Banks will often pay the appraisal fee or some of the other closing costs.

• Easy to work in a Home Equity Line of Credit (HELOC) into the deal.  These can be handy little tools, but can also get you in substantial debt trouble if you’re not careful.

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Big Bank Loan Officer Cons

• A higher interest rate on your mortgage (just a few tenths of a percentage point will mean thousands of dollars less in your pocket).

• You only get to negotiate with one institution – meaning you don’t know what leverage you have because you don’t know what others are offering.

• Getting a competitive rate involves shopping around and a time-consuming negotiating process that turns a lot of people off. 

• Canada’s big banks have fairly specific rules about who they can extend a mortgage to. There isn’t as much flexibility as with a broker.