A mortgage broker can compare products from lenders they work with, but their lender panel is not the entire market. Banks may also offer products directly, and some lenders do not work with brokers. Ask which lenders and products are included in the comparison.
Some brokers receive lender compensation on qualifying mortgages; borrowers may also pay fees in some arrangements or for some mortgage types. Ask for written disclosure of all compensation, fees, and referral relationships before proceeding.
Rates, cash-back offers, prepayment options, portability, penalties, and closing costs all affect the value of a mortgage. Compare written offers using the same term, amortization, payment frequency, and features; a lower advertised rate does not always mean a lower total cost.
A broker may be especially useful if your income, credit history, property, or mortgage purpose does not fit a lender's standard application. Ask how the broker will present your file, which lenders may suit it, and whether credit checks or appraisal costs apply.
Some straight switches at renewal may qualify for different mortgage-qualification rules than a new borrowing application. Confirm current eligibility and requirements with the receiving lender or regulator before relying on an exemption.
Broker licensing, fee disclosure, and consumer protections depend on province or territory and transaction type. Confirm the broker's licence and review all written disclosures and mortgage documents.
Worth It If You...
- Borrowers who want to compare more than one lender or product
- Self-employed, commission-paid, or contract workers whose income does not fit a bank template
- Newcomers to Canada with limited Canadian credit history
- First-time buyers who want more than one lender considered
- Anyone who does not enjoy negotiating and would otherwise just sign the renewal letter
Skip It If You...
- Someone whose bank has already offered them a genuinely competitive rate they have verified elsewhere
- Borrowers who need a specific bank product a broker cannot access, such as certain readvanceable mortgages
- Anyone unwilling to check whether their broker actually works with prime lenders
Pros
- +May compare multiple lenders in one process
- +May help explain options for a non-standard application
- +Genuinely valuable for self-employed, newcomer, and bruised-credit files
- +Some offers cover specified switching costs; confirm the written terms
Cons
- −Borrower fees can apply; obtain the amount and payment terms in writing
- −Broker quality varies widely — a bad one just sends you to whoever pays the most
- −No access to a few bank-exclusive products
- −Compensation varies by lender, which creates at least a theoretical conflict of interest
The Bottom Line
Compare written broker and direct-lender offers, including rate, fees, penalties and features. Ask how the broker is paid and which lenders they can access; neither free service nor savings are guaranteed.
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