Should you get your mortgage using a broker or a bank?

This article has been updated from a previous version. 

One of the major questions homebuyers face is whether to work with a bank or a broker to secure their mortgage. With interest rates now in flux and an ongoing affordability crisis, that debate has taken on new importance. 

According to the Canada Mortgage and Housing Corporation’s 2024 consumer survey, Canadians are nearly split on the question — 48% of 2024 buyers used a broker, while the remaining 47% turned to a financial institution.  

Both options have benefits, but the decision will likely come down to buyers’ personal circumstances. Here’s what you need to know about making the choice. 

Read more: The rate debate: Should you go with a fixed or variable mortgage? 

What are the advantages of working with a bank to get a mortgage? 

Buying a house is likely the largest financial decision you’ll make — but it doesn’t happen in a vacuum. Working with a bank can help you consider the larger financial picture: What does the current interest rate mean for you years down the road? And how do your mortgage terms fit into the context of your personal and financial goals and your future retirement needs? 

If you get your mortgage with the same institution you bank with, you can consolidate most or all your financial services with the same provider. This might make it simpler for you to get something like a home equity line of credit (HELOC), for instance. Some banks also offer additional benefits, such as paying your home appraisal fee or giving you a cash-back bonus.  

Learn more: All the different ways you can access equity in your home  

On the other hand, banks offer only their own products. While they do regularly give discounts on their posted mortgage rates, it’s often on the buyer to start the negotiation.  

You can choose to shop around with multiple banks, but you’ll go through the credit check process and paperwork each time, which can negatively impact your credit score. 

As banks are federally regulated financial institutions, they are required to meet federal underwriting guidelines. Their size and scale provide stability through potential market volatility, whereas smaller lenders could be disrupted by an economic crisis.  

While the latter can provide good mortgage rates, they tend to look for lower-risk borrowers and will have stricter policies around credit score, job stability, and even the type of property you want to purchase. They may not be willing to lend to people with trickier financial histories. 

Related: Government of Canada programs to support homebuyers in 2024 

What are the advantages of working with a broker to get a mortgage? 

Mortgage brokers function as a one-stop shop for multiple lenders, including banks, credit unions, online mortgage lenders, and trust companies. Besides the benefit of choice, you’ll only need to go through the credit check process once while being considered by numerous institutions.  

Brokers can also access exclusive deals that wouldn’t be available on the open market. They can also negotiate things like a better rate or a reduced application fee on your behalf and may get volume discounts with certain lenders that translate to lower interest rates for you. 

Licensed mortgage brokers are focused exclusively on mortgages rather than other financial services. This can be a real blessing to first-time homebuyers, self-employed and lower-income Canadians, who may have less ability to negotiate with banks and are more likely to be impacted by the mortgage stress test and other federal rules around mortgage approvals based on income. Just like banks, brokers can also offer HELOCs, and waive appraisal and legal fees. 

A major advantage of working with a broker is being able to access the variety of personalized options available. They’re able to find solutions for people with complex financial circumstances, such as poor credit or a history of bankruptcy.  

Brokers can work with alternative and private lenders to secure mortgages that banks otherwise can't or won't approve. And some brokers even specialize in mortgages for people with adverse credit — though it’s important to really understand the terms of such loans, which could come with higher interest rates and stricter penalties.  

In essence, all the benefits of working with a bank are equally applicable when working with a broker. Whichever option you choose, it’s in your best interest to compare mortgage rates from both banks and brokers to find the best price, regardless of who you choose. 

Read next: How much home insurance do you need?