Newsletter Subscribe
Enter your email address below and subscribe to our newsletter
Mortgage Broker vs. Banks: Which One Should You Choose in 2025?
Share your love
Here’s what we’ll cover:
• What’s the Difference Between a Bank and a Mortgage Broker?
• Why Do Banks Seem Easier — But Might Not Be Better?
• What Mortgage Brokers Do Differently
• Are Mortgage Brokers Really Free?
• Real-Life Example: Neha’s Decision Between Her Bank and a Broker
• Pros and Cons of Each (Explained in Simple Terms)
• Which One Gets You the Best Rate in 2025?
• Final Advice: How to Choose What’s Best for YOU
Buying a home is already overwhelming — and then you hear people say, “Go to a broker!” while others swear by their bank. So who’s right? Should you trust the bank you’ve been with since college, or try out a mortgage broker who says they’ll shop around for you?
In this article, we’ll break down what both options really mean in 2025, how they work, and what they can do for you — whether you’re a first-time buyer or refinancing your home.
What’s the Difference Between a Bank and a Mortgage Broker?
When you walk into a bank, you’re dealing directly with that single institution. That means you only get mortgage options from that bank — their interest rates, their rules, and their approval criteria.
A mortgage broker, on the other hand, is like a matchmaker. They’re licensed professionals who work with dozens of lenders (including some banks!) to find you the best deal. They don’t work for any one lender — they work for you.
Why Do Banks Seem Easier — But Might Not Be Better?
Most Canadians feel more comfortable walking into their bank because it’s familiar. You might already have a savings account, credit card, or loan with them. And yes — banks often offer you a mortgage specialist who will walk you through the process.
But here’s the catch: that bank employee can only offer you their own products. Even if better rates exist elsewhere, they’re not allowed to suggest them. Plus, bank policies are often stricter. If you’re self-employed, new to Canada, or have credit challenges, they might just say no.
What Mortgage Brokers Do Differently
Mortgage brokers take your application and shop it around. They send it to multiple lenders — including major banks, credit unions, trust companies, and even monoline lenders (who only do mortgages).
They know which lenders are flexible with income documents, who’s okay with bruised credit, and where the best rates are hiding today. It’s like having a personal mortgage hunter working behind the scenes while you go about your day.
📊 Mortgage Market Share in Canada – 2023 (CMHC)
Here’s how Canadians obtained their mortgages in 2023, based on CMHC data:
Big Banks: ~60% of new mortgages
Mortgage Brokers: ~30% of new mortgages
Other Lenders (Credit Unions, MIEs, etc.): ~10%
Source: CMHC Residential Mortgage Industry Report 2023
Are Mortgage Brokers Really Free?
Yes — in most cases, mortgage brokers are paid by the lender once your mortgage is funded. So you don’t pay anything out of pocket. That said, if your deal is complicated or you’re working with a private lender, some brokers may charge a fee — but they’ll always disclose it up front.
For regular homebuyers with good credit and income, working with a broker usually costs **zero**.
Real-Life Example: Neha’s Decision Between Her Bank and a Broker
Neha had been with the same bank since she was 18. When she got pre-approved for a $500,000 mortgage, her bank offered her a rate of 5.69% — no questions asked.
Just out of curiosity, she contacted a mortgage broker. Within 48 hours, the broker came back with three options. One of them offered a 5.24% rate — saving her over $8,000 over 5 years.
Neha stuck with the broker, and the whole process was just as smooth as the bank — but cheaper.
📉 Neha’s Mortgage: Bank vs Broker Offer
When Neha compared her bank’s offer to a broker’s, the numbers told a clear story. Here’s how much she saved by shopping around:
| 💼 Offer Details | Neha’s Bank | Mortgage Broker |
|---|---|---|
| 🏠 Loan Amount | $500,000 | $500,000 |
| 📉 Interest Rate (5-Year Fixed) | 5.49% | 4.89% |
| 📅 Monthly Payment | $3,065 | $2,906 |
| 💸 Total Interest Paid (5 years) | $83,900 | $74,360 |
| 🎉 Interest Saved with Broker | 💰 $9,540 over 5 years | |
💡 Shopping around for rates — especially through a broker — can lead to thousands in savings.
Pros and Cons of Each (Explained in Simple Terms)
**Bank Pros:**
– Feels familiar, especially if you already bank there
– Easier to bundle products like chequing, insurance, or RRSPs
**Bank Cons:**
– Only offer their own products
– Less flexible if your file isn’t perfect
**Broker Pros:**
– Access to multiple lenders = better chance of approval and better rates
– Great for first-timers, newcomers, self-employed buyers
**Broker Cons:**
– You’ll deal with the lender directly after closing (not the broker)
– Some people prefer one point of contact at their bank
Which One Gets You the Best Rate in 2025?
Most of the time, **mortgage brokers win on rate.** Since they’re competing for your business and have access to wholesale rates, they often beat the big banks.
That said, banks sometimes run loyalty promotions — especially if you’re an existing client — so it’s worth checking both.
📊 2025 Projected Average 5‑Year Fixed Mortgage Rates
Here’s how the **average mortgage rate** for **brokers** compares to that offered by **big‑bank lenders** in 2025 forecasts.
Broker – 5.10%
Bank – 5.40%
| Lender Type | Avg Projected Rate (5‑Yr Fixed) | Difference |
|---|---|---|
| 🏘️ Mortgage Broker | 5.10% | – |
| 🏦 Big Bank | 5.40% | +0.30% |
💡 *On average, brokers may secure rates ~0.30% lower than banks in 2025 — which could save you thousands over a 5‑year term.*
Final Advice: How to Choose What’s Best for YOU
