Bank Vs. Broker In-depth look at pros and cons

 A Calgary Mortgage Broker Vs. The Banks

Real Estate Brokers, Insurance Brokers, Investments Brokers, and Calgary Mortgage Brokers all have one thing in common.  They are professional experts within their fields of expertise.  That is all they do all day.  They are not an Electrical Engineer, a Rig Hand, a Long Haul Driver, a Call Center Representative, and doing this on the side.  It’s their full time career.  It’s true; you can do anything a broker can do with training, knowledge, interest, courses, passion, and the appropriate license.  You don’t have to go to a grocery store either.  You can buy a farm, and grow your own wheat, raise your own cattle, and let your chickens lay you eggs.  In every industry of goods and services there is a middle person, making your life easier.  An easier life is why I am writing this, and there is still a debate in Canada as to which is better, the Bank or the Calgary Mortgage Broker.  I have been on both sides of this coin, so I am in a position to offer a unique perspective that many are unaware.

Here are a couple of the Pros and Cons on the debate.  At the end of the day you have to make a choice which channel you want to go, and which channel would like to support.  I did try to make this list all encompassing, and even searched for other lists, but most dated back considerable time and more than three years ago, and this environment is always changing.

Mortgage Broker Pros:

• Best mortgage rate and product selection on the marketplace
• Bank offer lower rates to Brokers, as they don’t have to pay them salary to sit behind the desk, just finder’s fees if it closes. Also this is achieved through volume discounts.
• A free service and no cost to you.
• Truly independent advice, as they work for you, not the bank.
• More selection equals better rates, and products.
• One stop shopping.
• Ongoing support, and a relationship.
• If your credit score is bruised, they can find a lender who do the deal, and work with you to get the credit repaired
• You don’t have to negotiate, they will do the negotiating for you
• Access to the big banks and monoline lenders (which specialize only in mortgages), or B lenders that the banks don’t have access to in case your credit is not perfect.
• In Alberta we are provincially legislated and tested, and accountable to legislators
• Wont cross sell you other products like Credit Cards, or RESP’s

Mortgage Broker Cons:

• Has the potential to not be in your town or city.
• If the best rate and mortgage is at a monoline lender, then your banking will not be all in one place.  Some people like all their eggs in one basket.
• This channel only makes up approximately 47% of the new mortgage deals in Canada, as once a broker places you are with a big bank, they do their best to keep you with multiple product lines, and fracture that relationship with the potential nuisance of switching when the time comes instead of just signing a renewal form.

Bank Lender Pros:

• They can give you perks within the bank like a free chequing account.
• They can compete to some degree as they use the line:  “Go shopping, and find the best rate, when you are done come back and see me last and I will see if I can beat it.”  Which can be a pro and a con, as they can negotiate, but why not just give you their best rate from the start?  Are they hoping you are going to be lazy?

Bank Lender Cons:

• You get a statement, not a phone call, or a person who will be there if you need anything else down the road.
• Branches have higher turnover, so you will have a harder time trying to connect with a single person there for any duration.
• Lack of professional unbiased market wide training
• The big con is that you have to be able to negotiate  or else you won’t get a good deal
• A bank can only offer you their product line, and their rates, and don’t know or care about if someone can do it cheaper, or better.
• You have to do the shopping around which can be time consuming, making appointments and going to all the branches to see their mortgage specialists.
• Their rates often aren’t as good as mortgage broker rates
• If your credit score or ratios are not within their guidelines they will show you the door.
• They don’t decide in branch, usually it’s all automated by head office. 
• Not governed by any provincial legislative body.  The watch dogs are not holding the Mortgage specialist accountable; rather the bank polices their staff themselves.

The mortgage world is always changing as the government tries to heat up or cool down the markets by changing ratios, how people qualify, and who can get the mortgage insured. 

If you were flying to Rome tomorrow to go shopping would you want a trusted guide to show you where the deals were, or would you just like to walk around and find them yourself?

Or better yet, if you were charged with a crime and faced with a five year jail time, would you go to court and represent yourself?  Sure you could, but you rather have a professional that does it every day especially when it’s something as momentous as buying a home.  

If you have anything that you would like to add to my list, just let me know I would love to add it.   Likewise if you have any questions or requests from a Calgary Mortgage Broker who has lived both lives as is where he is for so many reasons.