What’s the Difference Between a Mortgage Broker and a Bank?

Introduction

When it’s time to get a mortgage, most buyers face the same question:
“Should I go through my bank, or work with a mortgage broker?”

On the surface, both help you get a mortgage—but the way they work behind the scenes is totally different. And that difference? It can mean thousands saved, or thousands wasted.

Let’s break down the pros, cons, and what actually sets them apart—so you can make the right call for your situation.

Understanding Your Mortgage Options

Your mortgage is likely the biggest financial decision you’ll ever make. And like any big decision, you want to know your options.

There are two main routes to go:

1. A bank (direct lender) – they offer mortgage products from their own institution.
   
   
2. A mortgage broker – an independent advisor who shops the market on your behalf.
   
   

Each has strengths. Each has drawbacks. What matters is choosing the right fit for your finances, your lifestyle, and your goals.

What Is a Bank (Direct Lender)?

Banks are what most people think of first. You walk into the branch you’ve used for years and talk to a rep about a mortgage.

Pros of Using a Bank

• Familiar and easy to access
  
  
• Pre-existing relationship may streamline the process
  
  
• May offer “relationship perks” like discounts or bundling with other products
  
  
• Great for borrowers with excellent credit, simple income, and conventional down payments
  
  

Limitations of Banks

• You’re limited to their mortgage products—no shopping around
  
  
• Mortgage specialists work for the bank, not for you
  
  
• Rates and rules may not be the most competitive
  
  
• Less flexibility for self-employed, new Canadians, or buyers with imperfect credit
  
  

What Is a Mortgage Broker?

A mortgage broker is licensed to access multiple lenders and compare options for you. Think of them as your personal shopper for mortgages.

How Brokers Work

• You apply once
  
  
• The broker shops your file to multiple lenders: banks, credit unions, monolines, and more
  
  
• They compare rates, terms, and product features to find the best fit
  
  
• They help you navigate paperwork, approval, and closing
  
  

Pros of Using a Mortgage Broker

• Access to dozens of lenders (not just one)
  
  
• Often better rates due to volume discounts
  
  
• Tailored solutions for complex situations
  
  
• Guidance and education throughout the process
  
  
• No cost to you in most cases (they’re paid by the lender)
  
  

When a Broker Makes Sense

• You want to compare offers without doing all the legwork
  
  
• You’re self-employed or have variable income
  
  
• You’re a first-time buyer needing extra support
  
  
• You’ve been declined by your bank
  
  
• You want someone representing your best interests—not the bank’s
  
  

Mortgage Broker vs Bank: Key Differences

Access to Lenders

• Bank: Only their own mortgage products
  
  
• Broker: Dozens of lenders (banks, credit unions, monolines, private)
  
  

Rate Shopping

• Bank: No – limited to their internal offers
  
  
• Broker: Yes – they shop for the best available rates
  
  

Who They Represent

• Bank: Their employer (the bank)
  
  
• Broker: You, the borrower
  
  

Flexibility

• Bank: Strict lending guidelines
  
  
• Broker: Flexible options for self-employed, new Canadians, or credit issues
  
  

Credit Requirements

• Bank: High credit score required
  
  
• Broker: Can work with alternative or bruised credit
  
  

Fees to the Borrower

• Bank: None
  
  
• Broker: Typically none; disclosed upfront if any apply
  
  

Service Style

• Bank: Branch hours, multiple departments
  
  
• Broker: Personalized, often available evenings/weekends
  
  

Rates: Who Gets You the Best Deal?

A lower rate = more buying power and less paid in interest. But here’s the catch: your bank only offers their own rates. And unless you’re actively comparing offers, you’ll never know if you could have done better.

Brokers often place millions in mortgage volume per year—and that gives them access to discounted or exclusive rates. Think of it like buying in bulk: more volume = better terms.

Flexibility in Approval

Banks often follow strict guidelines:

• Traditional employment
  
  
• High credit score
  
  
• Big down payment
  
  

But what if you’re:

• Self-employed?
  
  
• Have commission or bonus income?
  
  
• Carry a thin credit file?
  
  
• New to Canada?
  
  

A broker can match you with lenders who specialize in your exact situation. There’s no one-size-fits-all when it comes to mortgages—and brokers know where to send you when banks say no.

Service, Speed, and Convenience

Banks are familiar but rigid. You’ll meet during office hours. You might wait weeks for approvals. You may not even deal with the same person twice.

Brokers are typically available evenings, weekends, and by phone or video. Many act more like consultants—walking you through the process personally, not passing you from department to department.

Are There Fees?

Most of the time, you don’t pay a dime to the broker—they’re paid by the lender. But there are exceptions:

• Private or alternative lenders may charge fees if the file is complex
  
  
• You’ll be told upfront if a fee applies
  
  

Always ask: “Why are you recommending this lender?” Transparency matters.

When to Choose a Bank Over a Broker

• You have a long-standing relationship with your bank
  
  
• Your situation is straightforward
  
  
• You’ve done your own rate shopping and know what you want
  
  
• You’re bundling multiple products (e.g., HELOC + mortgage + investments)
  
  

When to Choose a Broker Over a Bank

• You want to compare options across lenders
  
  
• Your income or credit situation is unique
  
  
• You value personalized guidance
  
  
• You’ve been declined elsewhere
  
  
• You want to optimize your mortgage strategy long-term (e.g., portability, prepayment, refinance options)
  
  

Final Thoughts: Choosing the Right Fit for You

This isn’t about “which is better”—it’s about what’s better for you.

If you’re the DIY type who likes control, direct banks might suit you.
If you want options, guidance, and flexibility, a broker may be your best ally.

The key is asking the right questions and finding someone who works to get you the best deal—not just a deal.

FAQs

1. Are mortgage brokers more expensive than banks?
   No—most brokers are paid by the lender. You’ll only pay a fee if you use a specialty or private lender, and that should be disclosed upfront.
2. Do banks offer better rates than brokers?
   Not always. Brokers often have access to volume-based rates that beat what a bank offers the public.
3. Can I get declined by my bank but approved by a broker?
   Yes. Brokers have access to lenders that specialize in non-traditional borrowers or credit challenges.
4. Does applying with a broker hurt my credit score?
   No more than applying at a bank. Brokers usually run one credit check and use that for all lenders they approach.
5. Can a broker get me a mortgage from my bank?
   Sometimes. Some major banks partner with brokers, while others don’t. Even if they don’t, a broker can offer alternatives with equal or better terms.