Mortgage Broker vs Bank: What Canadian Homebuyers Really Need to Know
When you’re buying a home, choosing between a bank and a mortgage broker isn’t a minor detail. It can shape your approval experience, your flexibility, and the true cost of your mortgage over time.
At The Zadegan Group, we regularly guide clients through this decision. The distinction is simple on the surface, but powerful in practice.
A bank offers its own mortgage products. A broker offers access to multiple lenders.
That difference matters more than most buyers realize.
How a Bank Mortgage Works
When you meet with a bank, you’re dealing directly with that institution. The representative can only present mortgage products from their internal lineup. Approval criteria, rates, and structures are set by the bank’s policies.
For buyers with stable employment, strong credit, and straightforward income, this process can be smooth and efficient. If you already bank there, it may also feel convenient to keep everything under one roof.
The limitation? You’re seeing only one lender’s perspective.
If their underwriting rules don’t fit your situation, there may be little room for flexibility.
How a Mortgage Broker Works
A mortgage broker does not lend money directly. Instead, they connect you with lenders, which may include major banks, credit unions, and alternative lending institutions.
Rather than offering a single product menu, brokers compare multiple options across the market. They match your financial profile with lenders most likely to provide competitive rates and terms.
This broader access can be especially helpful if:
- You are self-employed or have fluctuating income
- You’ve had previous credit challenges
- Your down payment structure is unconventional
- You want to compare several offers without visiting multiple institutions
A broker’s job is to shop for you.
The Biggest Misconception: It’s Not Just About Rate
Many buyers focus almost entirely on interest rate. That’s understandable — it’s the number you see advertised.
But the lowest rate does not automatically mean the best mortgage.
Some low-rate mortgages come with:
- High penalties if you break early
- Limited prepayment privileges
- Strict refinancing rules
- Reduced portability if you move
If your life changes - and it often does - those restrictions can cost more than a slightly higher rate with better flexibility.
A mortgage is a contract. The fine print matters.
Negotiation Power and Leverage
Mortgage brokers often bring volume to lenders. That volume can sometimes translate into sharper pricing or improved terms. An individual borrower negotiating alone may have less leverage, unless they have a long-standing relationship or significant assets with a bank. That said, some banks offer loyalty pricing or bundled advantages for existing clients. This can make their offer competitive in certain cases.
The key is comparison.
When a Broker May Be the Better Fit
A broker may make more sense if:
- Your income is non-traditional
- You want access to a wider lender pool
- You need specialized structuring
- You prefer someone to handle market comparison on your behalf
When a Bank May Be the Better Fit
A bank may be ideal if:
- Your finances are straightforward
- You value simplicity and convenience
- You prefer managing everything within one institution
- You already receive preferred pricing due to your banking relationship
The Smart Approach
Many buyers take a balanced route. They get a quote from their bank, then compare it against broker options.
Side by side. Transparent. No assumptions.
This approach confirms whether your bank’s offer is truly competitive or whether better structuring exists elsewhere.
The Bottom Line
Approval is only the beginning. The real question is whether your mortgage will still make sense years from now if you move, refinance, or restructure. Choosing between a bank and a broker isn’t about which is universally better. It’s about which structure aligns with your financial reality and long-term plans. A mortgage is one of the largest financial commitments you’ll make. It deserves more than a quick rate comparison.
