Mortgage 101: Lenders and Brokers

During the mortgage process, you can either engage with a lender directly or a broker that can find a mortgage for you. So what exactly is the difference, and which one is better for you?

Lenders


You can obtain a residential mortgage from several types of lenders, such as:



  • Banks
  • Mortgage Companies
  • Credit Unions
  • Caisses Populaires
  • Insurance Companies
  • Trust Companies
  • Private Lenders


Some of the lenders focus on prime quality mortgage borrowers and some focus on non-prime borrowers, but you’ll also find lenders who cater to both. Keep in mind that non-prime lenders have different underwriting requirements for the mortgages they provide and also charge higher interest rates. 

When talking to a lender, they will only be able to inform you about their own mortgage offerings. If you want to see what is available across the marketplace and do a little mortgage shopping, you need to take a different approach.

Traditional Mortgage Brokers


The key difference between lenders and brokers is this: Mortgage brokers don’t lend money. What they do is provide advice and help you to find the right lender for you. Brokers do not charge fees for most loans, although they may charge fees for subprime loans. Their main source of income is commission paid to them by the lenders.

Some lenders originate all of their mortgages via brokers, while some use brokers for a portion of their lending or not at all. Most reputable and experienced brokers have access to many lenders and can potentially offer you a wide variety of alternatives. It’s important to note that many brokers focus the majority of their business with only a couple of lenders and may have a bias to offer you a mortgage product from these favored lenders. Be sure to check that your broker is showing you the best products available for you (and that they are properly licensed by the province that they work in!).

A collage of pictures of a woman sitting at a table with a laptop.

Online Mortgage Brokers 


IThere are now a variety of online brokers available to you in the market. Using an online broker can simplify the process for you and sometimes make shopping for a mortgage much easier and less stressful. Be sure you are selecting an online broker, like Frank Mortgage, where transparency and openness are a priority. At www.frankmortgage.com, you can see what lenders you qualify for and what products those lenders can offer you with no bias or filtering by an intermediary. You can review what the market has to offer you in one place and then make your own independent choice of what mortgage best suits you.


If you’re feeling overwhelmed by the idea of getting a mortgage, then doing your homework ahead of time can alleviate your concerns. If it doesn’t, you might want to seek out the advice of a broker or lender sales representative to guide you. But if you’re prepared and tech-oriented, then what you need is an online solution that provides you with accurate information and gives you open and transparent access to your mortgage alternatives. Your mortgage experience doesn’t have to be complicated or controlled by a third party. Frank Mortgage places you in the driver’s seat with a proprietary and secure online mortgage marketplace that is built for today’s borrower.

Best Mortgage Rates

Fixed
Variable
in

0.00 %

3 Year Fixed

Get Rates

0.00 %

5 Year Fixed

Get Rates
Check More Rates

About The Author

A man in a suit and striped shirt is smiling in a circle.

Don Scott

Don Scott is the founder of a challenger mortgage brokerage that is focused on improving access to mortgages. We can eliminate traditional biases and market restrictions through the use of technology to deliver a mortgage experience focused on the customer. Frankly, getting a mortgage doesn't have to be stressful.

Related Posts

Can Fixed Mortgage Rates Go Lower?

By Don Scott • November 25, 2024
With the Bank of Canada in a rate-cutting cycle, many Canadians expect mortgage rates to continue to drop. This may be true for variable mortgage rates since they track changes in the Bank of Canada rate. However, fixed mortgage rates don’t directly follow the Bank of Canada’s overnight rate. Instead, they are tied to the bond market, which has shown mixed signals recently.
A clock and a house are on a seesaw.

Variable-Rate Mortgage (VRM) vs Adjustable-Rate Mortgage (ARM)

By Don Scott • November 20, 2024
Now that rates have begun to decline again, many Canadian mortgage borrowers are considering variable interest rate options. These types of mortgages can save money in the right circumstances, but they come with risks that need careful evaluation.

Amortization Period Impact

By Don Scott • September 26, 2024
How the Amortization Period Impacts Your Mortgage The recent announcement from Ottawa allowing first-time homebuyers to secure an insured mortgage with a 30-year amortization period, up from the previous 25-year limit, has significant implications for borrowers. This change highlights the fact that different amortization periods are possible and that it is important for Canadian mortgage borrowers to understand how the amortization period affects the cost of their mortgage. While extending the amortization period can reduce monthly payments and provide a more affordable entry point into the housing market, it will increase the total cost of the mortgage over time. Let’s delve into the details and explore how borrowers can address this issue effectively. The Basics of Amortization Amortization refers to the length of time it would take to pay off your mortgage at the current mortgage rate. The amortization period assumes regular monthly mortgage payments. Each monthly mortgage payment covers both the interest on the loan and a portion of the principal amount. After every monthly payment, the remaining principal balance of your mortgage is reduced by the portion of the payment that goes toward principal. Over the amortization period the remaining principal balance will decline to zero. You will hear and read that the longer 30-year amortization period is good for mortgage borrowers. However, there is a trade-off in selecting the longer amortization period that borrowers need to be aware of. The benefit is that the longer the amortization period, the lower the monthly payments. Stretching out the repayment schedule results in a lower required payment per payment period. The longer amortization period can help borrowers qualify for a mortgage. A longer amortization may also provide some payment relief for existing borrowers struggling with a mortgage renewing at high rates. The trade-off to this short-term payment reduction is that the longer amortization results in a higher amount of interest paid over the life of the loan. In other words, the short-term relief from a longer amortization comes at a cost. Numerical Examples Let’s consider a mortgage of $400,000 with an interest rate of 4%. The chart below shows the difference in monthly mortgage payments for different amortization periods.