ELI5 why would you go with a bank versus a mortgage broker?

[cycosis]

As I near in on a home purchase, I have learned that brokers tend to have access to significantly better rates than banks.

An online broker has offered me 2.25% on a 5 year fixed rate where as my bank has offered 3.74%

Thats a huge difference. Why on earth would anyone go with a bank?

On a $350,000 mortgage, thats a difference of $200 a month!

[revelations]

Complacency, familiarity (one place for everything).

[HiTempguy1]

It really depends, but as revelations said, people walk in and go "I need a mortgage, I know you and you handle all my other financials" and then the bank goes "Here is your lube".

Servus could have "possibly" offered me a better 5 year rate then I currently have, but I think the early penalties were significantly higher. Different strokes for different folks.

But yes, overall just like with insurance, going direct to one of the "big banks" is rarely a rewarding experience.

I'm currently in the process of getting a personal loan, Servus wants my last two T4's, my current T1, 3 months worth of paystubs, an employment letter, etc etc I did less work to get my friggin mortgage LOL.

[ercchry]

Broker all the way, but be careful with those special rates... usually attached to a very restrictive product

[cycosis]

Originally posted by ercchry
Broker all the way, but be careful with those special rates... usually attached to a very restrictive product

Please elaborate?

[tonytiger55]

Its sometimes psychological. Sometimes people just want everything in one place for sake for ease.
Walk into your bank and you hear the usual tag line 'yeah i can do that'. But really you don't need to.

[jwslam]

Originally posted by cycosis
Please elaborate?

Depends what you're looking for...
variable vs fixed
open vs closed
ability to make pre-payments
high ratio vs low ratio/conventional
length of term

Mine is prime -0.5% variable open conventional 5 yr

[roopi]

3.74% from a bank? That seems really high.

I would always use a broker. Even if you want to work with a specific bank the broker can usually get you the same or better rate. In your case a broker could definitely get you a better rate then 3.74% from whichever bank quoted that.

With small lenders there are restrictions/penalties that you need to consider. Your broker should explain these to you.

[R-Audi]

Keep in mind you can also go back to that bank if you/family/business have dealt with them a lot and ask fr a better rate.

[FraserB]

Originally posted by HiTempguy1


I'm currently in the process of getting a personal loan, Servus wants my last two T4's, my current T1, 3 months worth of paystubs, an employment letter, etc etc I did less work to get my friggin mortgage LOL.

There must be something in your financial history that is a red flag to them then. My mortgage was a letter of employment and 3 pay stubs. Loan before that was 3 pay stubs and that's it. Both through Servus

[HiTempguy1]

Originally posted by FraserB


There must be something in your financial history that is a red flag to them then. My mortgage was a letter of employment and 3 pay stubs. Loan before that was 3 pay stubs and that's it. Both through Servus

Nope.

[roopi]

Maybe your loan officer at Servus is on beyond?

[ercchry]

Originally posted by jwslam

Depends what you're looking for...
variable vs fixed
open vs closed
ability to make pre-payments
high ratio vs low ratio/conventional
length of term

Mine is prime -0.5% variable open conventional 5 yr

^^^what he said

Usually looking at huge penalties if you sell before the term is up and low pre-payment options

[gwill]

banks will screw you with higher rates when you renew. They wont give you the same rates a broker automatically starts with.

I absolutely hate the fact one of my mortgages is with a main bank.. always a major #/@$? hassle when renewing.

[HiTempguy1]

Originally posted by roopi
Maybe your loan officer at Servus is on beyond?

[Xtrema]

Bank is definitely more expensive than broker. Usually only 1/4 - 1/2 point or so.

Never as drastic as OP tho. And back on topic, it's basically single pane view on all your asset and liability to go with your bank. But for that big of a difference, I won't go with the bank.

Also, 5 year fixed from banks is 2.94% right now. What history you got to spook them to give you a 3.74% rate?

Originally posted by HiTempguy1
I'm currently in the process of getting a personal loan, Servus wants my last two T4's, my current T1, 3 months worth of paystubs, an employment letter, etc etc I did less work to get my friggin mortgage LOL.

You asking for $1M or something? I have not applied for a personal loans for a long time since my original $20K in 1996 which they give it away like candies. I know they are stricter now but that's rough. All my loans are HELOCs now because they are cheaper to utilize.

[HiTempguy1]

Originally posted by Xtrema

You asking for $1M or something? I have not applied for a personal loans for a long time since my original $20K in 1996 which they give it away like candies. I know they are stricter now but that's rough. All my loans are HELOCs now because they are cheaper to utilize.

That's exactly what I asked them Who knows, like I said, I have zero badness on my credit score, my mortgage is literally about as small as one can have. Hence my irritation with banks. Gotta play by their rules though.

As soon as I have enough equity, I'll be switching any outstanding loans over to a HELOC. Just gotta wait it out a while.

[cycosis]

Originally posted by Xtrema
Bank is definitely more expensive than broker. Usually only 1/4 - 1/2 point or so.

Never as drastic as OP tho. And back on topic, it's basically single pane view on all your asset and liability to go with your bank. But for that big of a difference, I won't go with the bank.

Also, 5 year fixed from banks is 2.94% right now. What history you got to spook them to give you a 3.74% rate?



You asking for $1M or something? I have not applied for a personal loans for a long time since my original $20K in 1996 which they give it away like candies. I know they are stricter now but that's rough. All my loans are HELOCs now because they are cheaper to utilize.

No clue to be honest. No debt, no credit issues. Maybe just trying to take advantage of me? Only looking at 450k range

[gwill]

i wouldnt pick a random broker from online. Find someone local who can answer questions down the road.. brokers all have the same rates so why not support the local connection.

[90_Shelby]

I've found True North Mortgage to be one of the cheapest and they have a number of locations downtown. I used them on my last renewal and they had decent prepay options etc.

Rate Supermarket puts them at the cheapest as well.

https://www.ratesupermarket.ca/mortg...=no&rate_hold=