Mortgage shopping (in Canada)
January 5, 2023 2:23 PM   Subscribe

I am buying a home for the first time in Canada (ahh!!) and have been talking to both an independent mortgage broker and the mortgage folks at my bank. Other than looking at the rates and terms of the contracts they are offering me, are there any considerations involved in choosing one over the other?

Both agents I've talked to have been very helpful in answering all the questions I have as a first-time buyer. The construction on my new place has been delayed a bit and both have agreed to hold my application and rate (competitive) for now while it all gets sorted in the next few months. I've played them off each other a bit by getting them to match/beat the other's offered rate, but am not sure if it would be advisable to do that more than once. Terms for prepayment and refinancing seem roughly equivalent for both.

Other than the concrete terms (rate and contract) of what they are offering me, are there any other less tangible considerations to include when choosing one over the other? Assuming they are both in the picture when I'm ready to complete the sale, of course. Would committing to one over the other now be safer in case the construction situation continues to drag on? Any advice appreciated!
posted by btfreek to Work & Money (3 answers total) 4 users marked this as a favorite
Best answer: I'm in Ontario. I'd say most people speak to brokers here because they are having trouble getting a mortgage from a bank directly. There's nothing wrong with going through a broker, and they can shop around for you, but generally brokers are involved because otherwise the person isn't getting a mortgage.

How is your broker going to get paid? If the lender is paying them a commission then they may end up steering you towards the lender that is giving them the best commission. If you're working with someone at your bank then they're only going to steer you towards their own mortgages so it isn't as if they have your best interest at heart either but it is something to be aware of. If you are paying them directly then that's an added expense that you wouldn't be paying if you went through the bank directly. But if you have a broker that's been working for a while then you have some measure of confidence that in 5 years time when the mortgage is up for renewal they'll be around to help you with your next mortgage. If you go with the bank there's every chance that the person you worked with won't be there anymore. Plus they'll just try to get you to renew the loan with them so you'd have to do your own research to see what other institutions are offering.

If you'll be getting the mortgage from a regular bank at the end of the day, ie the broker arranges a mortgage from TD for you then your mortgage experience after it has been funded will be "normal" where you can walk into a branch and make changes to your mortgage. If the broker arranges a mortgage from a "B" lender (some trust company or other financial institution that gives mortgages but isn't a regular bank) then it may be more difficult to make changes to things like payment dates and they will likely stick you with all kinds of admin fees any time you ask them to do something. If the "B" lender has a better rate it may still be worthwhile to go with them, because how often does the average person make changes to their mortgage and saving a fraction of a percent on a million dollar mortgage will add up over time, but otherwise you'd be better off getting your mortgage from a bank.
posted by any portmanteau in a storm at 3:34 PM on January 5, 2023 [1 favorite]

Best answer: Tangentally related, but by far the most helpful thing I found as an Ontario resident getting a mortgage - please check out the RedFlagDeals Mortgage Thread. It's a bunch of deal savvy people who are helped by a handful of mortgage brokers. They're looking for business, obviously, but have been part of a symbiotic relationship with the group where they know to just offer the best deals with no playing around. Go to the end of the thread, read the last 5-10 pages of responses, which will give you a good idea of what rates you can get. Make a post and you'll get explicit answers. Maybe call a broker and tell them you're from RFD, and they'll give you the goods on all their questions, plus a no-hassle rate which will be best in industry. I used it to get a 5-year fixed rate 1.44% through TD, which I laugh about on a weekly basis...
posted by evadery at 6:48 PM on January 5, 2023 [3 favorites]

Response by poster: Thank you both, for the general info on how things work and the clutch tip on RFD (my RFD forum account is actually older than my MeFi account, imagine that!) where I've confirmed the rate I'm getting is pretty much as good as it gets in today's market (weeps gently at evadery's 1.44% 😭)
posted by btfreek at 1:04 PM on January 7, 2023

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