Understanding Mortgage Brokers vs. Banks

It’s a common question: do mortgage brokers usually offer better rates than banks? It isn’t a simple yes/no answer because it depends on multiple factors, including the broker’s connections and compensation models. Most often, a seasoned mortgage broker might indeed secure better rates than a bank, especially considering the wider range of loan options a good broker can access.

Perhaps a better question is, does a good mortgage broker offer better rates than a bank, to which the majority of the time, the answer is yes. It also depends on your qualifications. Mortgage brokers are client advocates and a good one will have access to many loan types the bank doesn’t. Often, when the bank says no, a good mortgage broker can get clients approved using their extensive product offering. Here are the hallmarks of a good mortgage broker, and some questions you can ask to better understand who you are dealing with:

1. Diverse Lender Network

There’s a common fear that property prices are in a bubble, and they might suddenly deflate. As mortgage brokers, we have access to a multitude of lenders and their varying loan products. This breadth of options ensures that we can often pinpoint a lender with the most competitive rates tailored for your specific circumstances. But we have to be willing to seek these products out. Some brokers are only approved with a half dozen lenders, whereas a good broker will be approved with 20-30 or more and understand what is available in the marketplace.

2. Skilled Negotiators

Our longstanding relationships with lenders put us in a prime position to negotiate on your behalf. We aim to secure not just the best rates, but also favorable terms to fit your needs. A good mortgage broker can also move your loan from one lender to another when appropriate when the market changes to secure better terms for you.

3. Lean Operations for Better Rates

Many of our lending partners operate with lower overhead than banks, especially those that are online based. We do, too. This translates to more competitive rates passed on to you, the borrower.

4. Transparency on Fees

While we strive for the lowest rate, we’re transparent about any associated fees. We’ll help you weigh the overall cost, so sometimes a slightly higher rate with fewer fees might be the best move or vice versa. Annual Percentage Rate (APR) which is supposed to provide a more complete picture of the loan’s cost is not always accurate.

5. Focused on Your Best Interests

While brokers receive compensation for bringing your loan to the lender, a good broker’s commitment is to serve your best interests. It’s our duty to provide unbiased advice and prioritize loans that are best suited to you. A good mortgage broker and lender will also provide a total cost analysis to help you analysis costs savings and strategize the best rate and terms for your situation.

6. Access to Special Programs

Certain lenders offer unique loan programs or discounts that aren’t widely advertised. Through an extensive network, a good broker can identify and secure these specialized options for you.

7. Responsive to Market Conditions

A good broker always has their finger on the pulse of the market. We collaborate with lenders who are proactive and responsive to market shifts, ensuring that we can consistently secure competitive rates. Individual banks and lending institutions come in and out of being competitive. A broker can choose between various options offering you the best at any given time.

8. Personalized Service and Expert Guidance

Above all, a good broker prides themselves on the personalized attention and expertise they offer. We’re not just here to get you a loan; we’re here to guide you through the entire mortgage process and beyond, ensuring you understand every step and are confident in every decision. After close, we will stay in touch to keep you informed about changing marketing conditions and to help when life events change your circumstances such that you need to make a change to your mortgage. We’re here for the long term.