How a mortgage broker differs from a bank
Pros and cons of a mortgage broker:
- They offer extremely competitive rates, often more competitive than a bank
- They will meet you anywhere, including after hours
- They can often get you approved for a loan with poor credit
- Since they are an independently operating business or freelancer, word-of-mouth referrals are extremely important. Therefore, they may offer to pay for your appraisal or legal fee in return for your business and referral especially if you commit to returning to them once your mortgage term is up.
- They're easy to get a hold of and to meet with, thanks to non-banker hours
- Although it is nice to be lent money with little or no credit, or to be approved for a mortgage that you may not be able to afford easily, it can be unscrupulous for them to advise you to do so (put you into financial trouble)
- The lenders may be smaller companies with little or no history (less borrower confidence)
- If there are quality control issues or you aren't satisfied with the service, you don't have a supervisor to complain to.
Pros and cons of a bank mortgage:
- Banks offer a high level of security (they are large corporations, so unlikely to go out of business) and are trusted and familiar for borrowers
- They may offer a perk or freebie with the mortgage, such as a free bank account
- Ease of services, such as ability to connect a mortgage to an existing account for payments
- The offer lines of credit, such as a home line, which can be attached to your mortgage
- Accessible, with 1-800 customer service numbers available at all times and branch availability
- You are responsible to do the shopping around and negotiating for the best interest rate, whereas a broker will do this for you.
- Subsequently, this also means that bank interest rates are not as good as mortgage broker rates.
- Less able to overlook poor credit scores, so you may not be approved.