What Is the Difference Between a Mortgage Lender vs a Mortgage Broker?

What’s the Difference between a Mortgage Lender vs a Mortgage Broker? There are so many terms thrown around in the finance world that it can be hard to figure out what means what. A mortgage lender lends money, while a mortgage broker finds money. Here we’re going to talk about the differences and roles that these two play when you’re trying to finance or refinance your home, and you’ll be able to enter the process with your eyes wide open. You’ll be able to see through the curtain and different tactics so you make the right decision for your financial future instead of theirs. Let’s get started.

What Does a Mortgage Lender Do?

Unlike your local Toronto mortgage broker, a mortgage lender lends you money. This could be a bank, a credit union or a private mortgage lender. You’ll have to fill out a mortgage application with them, then you’ll have to go through a whole process where they tell you they either want to work with your or not. This can be a stressful process, but in the end you’ll either get the financing that you need to buy a home or you won’t. It’s a very binary procedure.

Depending on what kind of mortgage lender you select for your mortgage, you’ll have a different experience. If you have bad credit and use a private mortgage lender you may have a better experience; if you have great credit and go to a conventional mortgage lender you could have a bad experience. It’s all about how you fill out the mortgage application.

What Does a Mortgage Broker Do?

A mortgage broker is your intermediary between you and the mortgage lender. You shouldn’t have to deal with these people directly; they’re better equipped for the situation that you ever could hope to be. You need a skilled negotiator who can help you make the most of your application. They’ll be able to help you look at what’s wrong and what’s right and answer any questions that you may have. There are so many things that can go wrong with your application so it’s imperative that you have someone to help you. If you’ve never filled out a mortgage application on your own before their help can be invaluable. Don’t lose out on a good thing just because you’re not sure what to do.

How Does This Help You?

Depending on what kind of circumstances you have, you’ll need to go about the mortgage process a specific way. If you’re a Canadian with bad credit for example you may want to talk with a mortgage broker to see if there are credit repair procedures that you can do to get a better result. If you’re someone with a great credit score you may want to talk with a private mortgage lender to see if you can get better terms. Just because you have good credit doesn’t mean you’ll want to go with a conventional mortgage lender. It’s all about what your situation is and what you need for your case. Talk with a mortgage broker today and see what is right for you.

Guest Post By: Mike Smith is a mortgage broker and avid blogger for Home Base Mortgages. HBM is a Toronto mortgage broker that provides home mortgages, mortgage refinancing, home equity loans, debt consolidation, private mortgages and second mortgages.

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  1. I personally have used a mortgage broker in most of the dealings I’ve had with these folks. It’s nice to be able to use one person that helps shops rates for you and works to find you the best deal available.

  2. Would you shop around for brokers the same way you shop around for lenders? I’ve always wondered that…if putting the pressure of competition on them would help them find the motivation to get you even better deals.

    • Good Question although I’m sure they would all have access to the same interest rates although what do I know. I would shop around for a reputable broker and you can ask as many questions as you want. Maybe a good question to ask my mate Mike… cheers Mr.CBB

    • Hi there, I would say yes, you should shop around initially to get the “right” Broker for you, just like a Realtor, Lawyer or Accountant, you want someone who listens to you, who is working for you & someone you can relate to. As for whether they are motivated enough to find you the best deal, this will be part of your choice, looking at their testimonials etc. & getting comfortable with how they do business. However, it is important that you choose them up front and don’t have more than one working on your mortgage at a time, this can cause issues with lenders, since they may receive information that is not identical, they may think fraud is occurring.

      • Lenders do offer some Brokers different packages, usually based on the amount of volume that Broker brings to the Lender…like any business, volume can mean better options. Ensure you are dealing with a professional Broker and you will likely then have access tot he best lender packages.

      • Thanks Mike, I figured you would pop in an lend us some of your professional advice as always. Thanks mate. Mr.CBB

  3. Christine Weadick says:

    Thank you for explaining the difference between the two. We’ve never used a broker but I don’t remember hearing about them the last time we bought a house,20 years ago. this certainly gives me something to think about…..

  4. Congrats on your success so far! Thanks for including my post in your roundup, I really appreciate it!

  5. Canadian Performer's Money says:

    I used a mortgage broker when I needed a mortgage years ago and enjoyed the process. It doesn’t cost you anything and they do all the leg work comparing quotes and finding someone who will work with the self-employed.

    In the States, car insurance is privatized and I always went through a broker to find the best price instead of weeding through the hundreds of companies myself.

    • We used a broker as well when we bought our house here. Mrs.CBB wanted to go to the bank as she was not familiar with brokers but I was. We are both glad we did as we were happy with the rate and term that we got although it did go lower. You never know though, anything can happen when numbers can go up and down on the dime. Cheers Mate.

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