Mortgage Broker vs Bank in Canada: Which is Better? [Perfect Guide]

The first property you buy is always exceptional. Several emotions are associated with it, and a tremendous amount of effort and energy goes into buying our first property.

However, before getting the key to happiness in your hands, you’ll probably have a handful of complicated documents regarding how you plan to purchase your house.

Now, while this might be an easy question, it is crucial to understand that there are layers to that question.

Do you have the full money to pay for the house in full? Do you plan on getting a loan or a mortgage? What are the advantages of getting a mortgage through the best mortgage broker, and why is it better than getting a loan from a bank?

What are the pros and cons of getting a loan from a bank? So you see, there are a number of questions that arise out of one single question. Well, if you neither plan on taking a mortgage nor getting a loan from a bank, a number of problems get solved.

However, if you do not plan to pay for your house in full, you will either need to take a mortgage from a mortgage broker or get a loan out from a bank, and with that comes the most critical question: Which one is better?

Now, before we get into what exactly the differences are and which one to choose, let’s briefly go through what exactly these two are:

A mortgage is an amount you borrow from a lender to pay for your house. In the process, you end up offering your house as a guarantee and keep paying the loan back to the lender in monthly installments. Which will include both the capital amount that you borrowed and the interest that you would have to pay on your loan! The ownership of your house will be considered void if you fail to pay the loan back.

A loan, on the other hand, needs to be explicitly taken out of a bank. The bank will have a fixed rate of interest, and there will be a number of documentation that you would need to go through in order to get the bank to give you a loan.

Besides, even before the documentation, you will need to qualify and show your eligibility to get a loan, and you will also have to show the bank that you can give something as collateral in case you fail to pay the loan back.

• 10 Best Top Rated Mortgage Brokers in Surrey

Well! What are The Advantages of Getting a Mortgage from a Mortgage Broker?

• With a mortgage broker at your disposal, the entire process of buying your house, right from documentation to actually buying the house, gets a lot easier. Not only will a mortgage broker be able to answer all your queries with regards to how you can get a mortgage. but they can also get all the documents that you will actually need to apply for a mortgage.
• At a bank, you will only be able to get a loan that the bank has to offer. With a mortgage broker, however, you will have access to a number of different loans. Mortgage brokers usually possess a lot of information as to which financial institutions are offering mortgages or loans, and they also have contacts to find mortgages that are more suitable for your specific requirements.
• There could be cases where you might not be able to get a loan from a bank. Why? There could be a number of reasons. If you do not have proper collateral to show the bank. Or if you lack a decent credit score or even gaps in employment could also cause a hindrance in the process of getting a loan from a bank. A mortgage broker will help you out with regard to this problem and also find you something that suits your criteria.
• One of the most critical aspects that a lot of people might want to take into consideration while buying a house is convenience. Getting a loan from a bank is a process that involves quite some hassles and paperwork. There is a lot of time and energy that goes into just applying for the loan, and then getting it approved is a matter of some more time. A good broker will usually do everything you need to get done to get a mortgage as quickly as you need. Good mortgage brokers can substantially reduce the time one might need to actually buy their house.

Well! What are the pros and cons of getting a loan out of a bank?

There are a number of things that people have to say about getting a loan. But, let’s take a closer look at why getting a loan is different from getting a mortgage and how it might be better or worse than a mortgage, depending on your requirement.

PROS:

1. Getting a home loan might prove to be rather beneficial in terms of cost-effectiveness. A home loan is available at a lower rate of interest in comparison to other forms of borrowing money.
2. When you ask for a loan. The bank usually does a good background check of the property. This, in turn, proves the credibility of the property that you look forward to living in.
3. Paying back the loan in time increases the credit score of an individual. Therefore if you borrow a loan and keep playing it back in time, you will have the provision of getting another loan if you need it.
4. Banks are usually big institutions. Familiarity and trust can be a big deal when it comes to buying a house.

CONS:

1. Banks will only offer the loans that they have in option. It can be a big ordeal to get a loan from a bank that suits your specific requirements and criteria!
2. Banks are severe with regard to the documentation. You will have to go through a number of documentation processes and also have a strong credit score to apply for the loan application. Post the application process; there will also be a series of steps before you finally get the approval for the loan from the bank.
3. Besides the long list of documents that you will have to provide, you will also need to have patience. Getting a loan approved from a bank does take some time.
4. It could be very inconvenient. Almost everything starting from applying for the loan, getting the documentation right, to finally getting the loan approved, is a tiring process. You would have to do everything yourself. Moreover, there could be a number of things that you might not be able to do by yourself the very first time.

When you get a mortgage for a house, you might have to pay a bit more interest than you would at a bank. However, that too might depend on a few factors. If you find yourself an excellent mortgage broker, they could find you mortgages at very decent interest rates.

In the end, however, whether to choose a mortgage or get a loan from a bank will depend entirely on your personal requirements and criteria.

If you feel that convenience is a factor you would like to be a part of your experience, you should definitely find yourself an expert mortgage broker that can carefully listen to your requirements and find you an option accordingly. However, if you feel that a bank is what you need, then that too will depend on your requirements.

Also Read: 3 Tips To Help You Get A Good Mortgage Rate 

FAQs:

Is it better to get a mortgage from a bank or broker?

Banks will offer loans, while brokers can help you find a wide range of different mortgages. Buying the first property is an emotional affair. Whether to get a loan from a bank or a mortgage from a broker will ultimately depend on your own requirements and convenience.

Is a broker better than a bank?

Both banks and mortgage brokers have their own advantages. Depending on what exactly your requirements are, you will be able to figure out whether a bank will prove to be a better option, or getting a mortgage is what you should do.

Is it worth going through an online mortgage broker?

If you want a hassle-free experience and wish to find a financial option that suits your particular requirements, then you should definitely go through a mortgage broker to find out exactly what you need.