Mortgage Brokers vs. Direct Lenders: Navigating the Canadian Market in 2025

Should You Go Broker or Direct?

When it’s time to get a mortgage in Canada, one of the first decisions homebuyers face is whether to work with a mortgage broker or go directly to a lender like a bank or credit union. Both options have their perks — and drawbacks. In 2025, with increased policy changes and lender competition, understanding how each path works is more important than ever.

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What Is a Mortgage Broker?

A mortgage broker is a licensed professional who acts as a middleman between you and multiple lenders. Instead of going to one bank, a broker shops around on your behalf — comparing rates, negotiating terms, and helping match you with the right product.

Brokers can also access non-traditional sources like Mortgage Finance Companies (MFCs), monoline lenders, and private mortgage funds that aren’t accessible through banks.

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What Is a Direct Lender?

A direct lender is typically a bank, credit union, or financial institution that lends money directly to borrowers. You approach them yourself — either online or at a branch — and they walk you through their in-house mortgage products.

In Canada, common direct lenders include RBC, TD, Scotiabank, BMO, CIBC, and Desjardins.

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Benefits of Mortgage Brokers

Brokers offer several advantages:

• Wider Range of Options: They can compare rates from 20+ lenders, including non-prime or niche options.
• Tailored Advice: Especially helpful for newcomers, the self-employed, or borrowers with unique needs.
• Potential Cost Savings: Some brokers can negotiate discounted rates or lender-side perks you won’t get on your own.

For instance, a newcomer with no Canadian credit history may find better approval odds via a broker than walking into a major bank branch.

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Benefits of Direct Lenders

Despite brokers’ flexibility, direct lenders have their strengths:

• One-Stop Convenience: If you already bank with them, it’s easy to apply and manage your mortgage.
• Bundling Benefits: Some banks offer mortgage rate discounts when bundled with other products (credit card, RRSP, savings).
• Familiarity & Trust: Longstanding banking relationships can make approvals smoother.

Many first-time buyers prefer this route for simplicity and peace of mind.

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Potential Drawbacks of Each Option

Brokers

• May offer too many choices, overwhelming the borrower
• Quality of advice varies — not all brokers are equally experienced
• Some charge a fee (usually for private or alternate deals)

Direct Lenders

• Only show their own mortgage products — no comparisons
• Limited flexibility in underwriting criteria
• May not offer the lowest rate unless you negotiate hard

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How Regulation Protects You

Mortgage brokers in Canada are licensed provincially and must follow strict disclosure rules under regulators like FSRA in Ontario and BCFSA in BC. This means they must explain compensation, lender relationships, and any potential conflicts of interest.

Direct lenders also follow strict federal guidelines under OSFI and offer protection through internal ombudsman channels.

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Who Should Choose What?

Go With a Broker If You…

• Are self-employed, a newcomer, or have bruised credit
• Want to compare multiple lenders
• Prefer tailored advice with a broader menu of options

Go Direct If You…

• Have a straightforward profile and a strong bank relationship
• Want bundled financial services from one place
• Prefer simplicity and minimal steps

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Real-Life Example:

Priya, a freelance designer in Ontario, struggled to get approval from her bank due to irregular income. A mortgage broker connected her with a monoline lender offering competitive rates and flexible terms.

On the other hand, Mark and Julia — salaried professionals — went straight to their bank and secured a discounted 5-year fixed rate by bundling it with their TFSA and insurance plan.

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There’s No One-Size-Fits-All

Whether you choose a broker or go directly to a lender, the key is understanding your financial profile, comfort with complexity, and how much choice you want. Both routes can lead to great outcomes — but it pays to ask questions, compare options, and work with professionals who prioritize your long-term interests.