Mortgage Broker

A mortgage broker is like having a professional agent. They do all of the work and strategic negotiating, and are paid a commission from the bank (not from you) for securing a good borrower. They work for themselves and compare the rates from dozens of lenders. It’s important to remember that mortgage brokers are not actual lenders themselves.

Think of mortgage brokers as connectors. They seek out people interested in borrowing for a home and match them up with a lender that works best for their situation. Mortgage brokers work by getting to know you, calculating what you could be approved for, assembling all of your paperwork, sending your application, and discussing with you what would work in terms of a fixed or variable mortgage & fixed or closed term. Many people report they liked their mortgage broker because they can often get a better rate than if they went directly to a big bank. Lots of people also say that their mortgage broker helped them get approved even though they had poor credit or a low down payment.

Big Banks

When you go to one of the major banks for a mortgage they will usually have you sit down with a loan officer. They’ll guide you through some of terminology involved with mortgages and make a recommendation to you based on what you tell them. Loan officers usually get paid through some combination of salary + commission + bonuses, and they won’t ever recommend that you look elsewhere. (Unlike a mortgage broker, loan officers have no real incentive to snag you the best deal possible – indeed, it’s sort of the opposite.)

So, who to choose?

Choose a Mortgage Broker

  • They can meet you on your time – or if you go with an online broker they make it very easy to communicate via email, Skype, etc.
  • You get to see all of your options and are basically guaranteed to get the lowest rate possible.
  • Brokers often have more flexibility in terms of getting you approved with non-traditional lenders.
  • If full-contact negotiating isn’t your thing, have no fear, mortgage brokers will do the dirty work for you.
  • They will sometimes pay for things like inspections or appraisals out of their own pocket. The idea here is that they wish to secure your loyalty for the long term so that you’ll go back to them for your next mortgage term, as well as recommend their services to others.

Do not Choose Big Banks

  • A higher interest rate on your mortgage (just a few tenths of a percentage point will mean thousands of dollars less in your pocket).
  • You only get to negotiate with one institution – meaning you don’t know what leverage you have because you don’t know what others are offering.
  • Getting a competitive rate involves shopping around and a time-consuming negotiating process that turns a lot of people off.
  • Big banks have fairly specific rules about who they can extend a mortgage to. There isn’t as much flexibility as with a broker.


You just can’t beat a mortgage brokers’s combination of extremely low operating costs, dozens of options to choose from, and the ability to browse without being hassled or scared into something that isn’t in your best interest. The rates quoted by mortgage brokers have to be their best offer because they know consumers will be directly comparing it to everything else on the market – thus cutting out the tedious rounds of negotiating.

Whatever you do, don’t just head down to your big bank and sign on the dotted line for the first mortgage rate they mailed to you. Unfortunately, most people are hesitant to engage in the aggressive tug-of-war that is needed to get themselves the best deal. Banks love it when folks simply walk in, say they need a mortgage – or that they are ready for the house of their dreams – and then sign on thinking that a few percentage points one way or the other can’t matter that much.

For most of us, our mortgage will be the biggest financial decision we ever make. Understanding how to save yourself a percentage point here or there can mean an extra trip with your family, or speeding up that retirement date by a couple of years.