Mortgage Brokers and Banks: The 3 Major Misconceptions

When it comes time to apply for a mortgage, you might wrestle with the decision to go through a mortgage broker, or to go through your bank. The one you choose will ultimately be the one that’s best for you, but so many people automatically favour banks for their mortgages because they think bank mortgage loans carry more benefits than loans obtained through a mortgage broker. But, that’s not actually true. And you need to break through the major misconceptions before you make your choice. Here are the biggest three that home buyers generally face.
Mortgage Brokers are Going to Push You Into a Fixed Rate
This is perhaps one of the biggest misconceptions, and one that is absolutely untrue. We at Canadian Mortgages Inc. actually favour variable rate mortgages because they hold so many benefits for homeowners, especially with today’s low interest rate forecasted to remain low for at least the next couple of years. That being said, sometimes a fixed rate is the better choice for homeowners. One of the biggest reasons mortgage brokers sometimes recommend a fixed rate is because these mortgages are much easier to be approved for. A good mortgage broker will always go over all your options, and will give you informed advice on which route is best for you.
Banks Offer Discounts to Loyal Customers
This one has recently proved itself to be quite untrue. In a recent study of The Bank of Canada, it was found that new customers actually paid significantly less than customers who had their mortgage there for several years. The reason for this is that banks are always offering new discounts and cheaper rates to entice new customers to get their mortgage through their bank. A mortgage broker on the other hand, looks through all the available mortgage packages out there and will find the one that’s the cheapest for you.
Banks Have Better Reputations than Mortgage Brokers
This isn’t at all true, and it’s not true that mortgage brokers have better reputations than the banks. Just like anything else, you need to judge each lender on their past reputation, whether they’re a bank or a mortgage broker. Sometimes you’ll find mortgage brokers that don’t have the best reputation, and sometimes you’ll find banks that don’t have good reputations when it comes to the mortgage packages they offer. And, a quick look at the recent lawsuits against the banks in the United States, and the situation with the RBC specialist last spring, shows that the reputations of banks can’t always be counted on.
The bottom line is that no one is going to be able to tell you whether or not going through your bank or a mortgage broker to get your mortgage is the best choice. You’ll need to look at all the available options before deciding which one is going to give you the best deal. And going into that decision with a bunch of misconceptions isn’t going to help.