When you have a home purchase or home renewal in mind, you think of borrowing money from a mortgage broker or the bank. In today’s article, we are going to highlight the differences, pros, and cons of both the options. The mortgage brokers work with numerous lenders, which include insurance agencies, private funds, trust companies, and small lenders. The traditional banks are financial institutions that have their fixed rate of interest for loans and are mostly used by the majority of the homeowners for a mortgage.
Difference between bank and mortgage broker
The primary difference is that a mortgage officer of the bank would represent only the products offered by their institution. While a mortgage broker works as a negotiator between multiple lenders and customers. Once the deal is done, they are paid a referral bonus by the lenders. Mortgage companies in Toronto have to have a license to work and come under the regulation of the Financial Services Commission. Getting a good deal with the best rate of interest is the main reason why people take the help of a broker. The brokers find it easier to crack a deal for their customers because they work with many lenders.
Pros and Cons of a Bank:
- Most people have an account in a bank and they are well acquainted with the place and their staff. The relation with a bank is strong which helps in getting hassle-free work done.
- Banks offer many financial products that are beneficial to the people. The bank officials can enlighten you with broad financial views.
- The loan approval process in a bank might be easier and faster because the bank knows about their customer’s account balance, investment and credit card history.
- Banks are large and stable financial institutions that can take care of financial instabilities. This gives the customer peace of mind.
- The bank loan official would not be able to give specialized knowledge about a mortgage.
- There is less scope of getting a low rate of interest because here the customers wouldn’t be able to bargain.
Pros and Cons of Mortgage Brokers:
- It is a one-stop-shop for the customers. They do not have to go searching for all the options. All they need is to just fill out an application form and the lenders would send the quotes themselves.
- Mortgage companies Toronto can bargain with the lenders. Hence, they are in a position to get better rates than what is offered by major banks.
- Mortgage brokers are specialists and are quite knowledgeable. They have the information on what the different lenders have to offer.
- People with a poor credit history or self-employed people usually find it difficult in getting loan approval from the bank. The mortgage broker helps to find a suitable lender at the best interest rates.
- People are sometimes finicky about the lender’s existence and whether they would be able to handle the financial market crisis.
- The procedure for loan approval might take time as the customer would be new for the lender.