Sometimes back, guys who intended to buy a home quickly ran to their banks for their mortgage needs. But as the popularity of the mortgage brokers continues to increase, more options are now available, reports Rate Choppers.
While making a comparison of the two, we may opt to get a detailed definition of a bank and a mortgage broker.
What is a bank?
A bank is a chartered financial institution that has mortgage services, loan, credit card services and personal banking.
What about a mortgage broker?
Is a licensed mortgage specialist and has access to many lenders as well as mortgage rates. This intermediary will be paid a commission for the services offered.
How do they differ in popularity?
As per a report by the Canadian Association of Accredited Mortgage Professionals, the banks enjoy a fair share of the market, taking 60% of it while the mortgage brokers enjoy 40% of the market share.
Mortgage broker vs. bank Roles
If you want to get a lender, you have two options on the table; you may choose to go directly to the bank, or you may decide to visit a broker.
Both banks and mortgage brokers have a very crucial role in the entire mortgage process.
The brokers assist in matching you with lenders who will effectively suit your requirements. They help you access the largest number of deals available. You will not therefore limit yourself.
The other alternative is to look for a loan directly through a bank. It is a perfect choice to those who properly understand the mortgages. In this case, the bank will offer mortgage rates to you. You then have to personally get involved in the negotiation process.
Mortgage broker vs. bank, pros and cons
Banks allow for consolidation of services with a provider with whom you have a relationship that is ongoing. It is deemed that there is trustworthy.
Mortgage brokers do not base on only one lender. They “shop” around to get their clients a mortgage at the lowest rates in the market. They negotiate discounts on your behalf.
Banks only have the ability of accessing and offering rates and products of their own. Discounts will be given in the mortgage rates but it is up to you do the negotiation.
Mortgage brokers have not yet established a strong footing in the market. First time buyers of a home are yet to establish a prior relationship with them.
A mortgage gives you the funding that is beneficial when buying a home outright. Importantly, it is basically some kind of a loan. Taking out a mortgage on a house is same as using a new home for collateral. The home becomes officially yours, and you pay the lender back directly for the offered loan. You should put in mind that the property is not completely yours. If in any case you default on the home, then the lender has power and authority to take the possession of the home. This helps to secure the bank or the specific lender. It reduces their risk and alerts you of taking the activity with the much commitment and seriousness it deserves.