The Difference Between Using the Bank and a Mortgage Broker

We get this question a lot from our first time buyers — are banks and mortgage brokers the same? The quick answer is no and here’s the definition and difference between the two.

A bank offers you a home loan. They usually have a set rate and strict rules for approving mortgages.

On the other hand, a mortgage broker arranges mortgage financing between a borrower and a lender. They act as a middleman. They are not the ones you borrow money from, but they negotiate with various lenders or banks to provide you with the best rate for a home loan you can qualify for.


That said, which is better when buying a home — working with a bank or a mortgage broker?


Pros of Direct Lender (Bank)

  • Having a good relationship with a bank gives you the benefit of familiarity and may make you eligible for special perks.
  • Offers the convenience to have all dealings with one financial institution.
  • Cuts out the middleman and may speed up the process.
  • Some find working with a major bank safer.
  • Less documentation, banks already know you.


Cons of Direct Lender (Bank)

  • Only have in-house mortgage products and offers.
  • Higher rates.
  • Fixed rates make it hard or impossible to negotiate at all.
  • Stricter requirements especially if you have a poor credit history.
  • Have fixed office hours and you’ll work with various officers from time to time.


Pros of Mortgage Broker

  • Free financial advice throughout the process.
  • Easier communication with one representative through email or call.
  • Saves you time and effort with access to many lenders.
  • Helps you find the best rate possible to save you money.


Cons of Mortgage Broker

  • They may not have all the information at their fingertips and may need to contact the lender to ask questions.
  • May require more documentation to support your application with a new lender.


It’s vital to find the right loan with the most favorable terms possible for you since it’s a long-term commitment. Here’s what you need to get your mortgage approved.

If you or anyone you know is interested in being qualified to purchase a home right now, please feel free to contact the agents at Broadpoint Properties.