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Scott Dillingham: [00:00:00] Welcome to today’s show. Today, the topic is going to be banks versus brokers. So what it’s like working for two different types of lenders. All with the same goal to help you accomplish your dreams of owning your home. So I had many years in the bank. More so than working for a mortgage brokerage.
I know both sides. I know the pros and cons of both. And I’m going to share them with you here. So when you’re considering buying a home. Or an investment property, anything to do with real estate. You’ll be able to make an educated decision. On which lender type you should go with. So I’m going to be touching on.
The service between the two. The rates. The options. And the feasts. Okay. So we’re going to cover those four segments. And then at the end of the show, you’re going to be able to determine who the best lender is for you. So I’m going to make this. Very. Fair for both sides. I’m not [00:01:00] going to make it pro one side or the other.
I want you to be able to make that decision on your own. So let’s talk about service. With service. I know, being at the bank, they really do strive. And they have the training. To provide the best service. And I learned a lot about customer service dealing with the bank, things like, the customer’s always right.
And Just how to speak to clients in certain ways and use certain words that don’t upset someone. Even though your goal is not to upset someone when you’re just having a regular conversation, certain words are triggers and can affect you. So I’ve, I will say the training for customer service.
On the bank side is absolutely better. Than what they teach. On the mortgage brokerage side. However. I will also say on the mortgage brokerage side. They do want you to provide good customer service. If you don’t there’s ramifications. It is [00:02:00] important to give the service, but at the bank I found that the teach you how to be the best that you can be with customer service.
Now there’s a line though, in the sand with a statement. Because yes, the bank teaches you to provide good customer service. But it doesn’t always mean that people do. And I did follow. The best customer service that I could because I was a commission only role. And I wanted to. Make the most for my family and to create a successful name for myself. So it was very important for me to follow those guidelines.
But somebody who is working nine to five, getting a salary, they may not share the same drive that I did. So I do want you to know that with the bank. And also with the brokers, even though. The training may not be as in-depth as the bank. It’s the same thing. They’re on commission. So they are striving to be really good.
In both fields, whether it’s a bank. Or on the broker side. You’re going to get people that have [00:03:00] terrible customer service it’s going to happen. It doesn’t matter what industry. Whether it’s retail. Restaurants. It doesn’t matter. You’re going to get people to have bad customer service. Those people usually don’t succeed or don’t do well.
I do think the bank wins a little bit on the training side. Hours of operation, right? So a broker. Or mortgage agent, I’m classifying them under the same thing. Cause they do the same thing. To a point, a broker will take care of compliance and other things like that. And there’s a little bit of different licensing, but ultimately as far as you’re concerned in getting your mortgage, they’re pretty much the same thing.
So a bank usually has set hours that they’re open. Now my specific role in the bank was mobile. I could work whenever I wanted, which is the same. On the mortgage broker side of things, you can make your own hours and you work the dedicated amount of time. So I would say that was similar for me. However, most of the bank staff is that salary nine to [00:04:00] five, or maybe they’ll work 11 to seven. If the banks opened late,
So you have to get in there at those certain times. Or else you don’t get that service you need. We actually receive lots of customers from the bank. Because they set up, they couldn’t meet me until two days from now. And they said it would take a week for an approval. And that’s because the person they were going to see in the branch has a regular schedule and they already had meetings books. So they’re not as flexible. So I think as far as hours.
I think either a mobile sales professional at the bank. Or a mortgage broker mortgage agent is going to be much better than dealing with somebody in the branch. Okay. So you do need to know that. It’s especially important because if you have an application. And you need an answer and it’s due by 10 o’clock at night.
And the bank rep is not there, or their meetings are full for the day. They’re not going to be able to respond to you where a broker or a mortgage agent or mobile Salesforce for the. The [00:05:00] banks will be around and available to, to help you. Now speed. This is where I think that the, a mortgage broker or a mortgage agent side of things.
Is actually a lot better than the banks. I remember when I was at the bank. In the busy summer. Seasons some applications would take. Two to three weeks. To review, and this is purchases like even if they had a five day condition period. It was still taking two to three weeks. And I know that’s still an issue at some of the banks.
And I know that’s an issue with some of the lenders that mortgage brokers and agents have access to. We actually had one in the summer that took six weeks to review a file because it was just so busy. But that’s where a mortgage broker or a mortgage agent has the advantage over the bank. I remember when I was at the bank and it was those busy seasons. There was not much you could do. I would pull my weight around as much as I could and stress, I’m, you’re.
One of your top guys, like you got to help me out. Life deal. We got to [00:06:00] move forward. And That would help sometimes, but other times they would say, sorry, we’re too busy. And it would just, the client’s file would get delayed and delayed. And we would fight it. And there’s nothing that we could do.
Because we only had that lender. So you’re stuck with the lenders capacity when you’re just going to one. Now on the mortgage agent side. We know. I’m assuming that everybody knows, I know what lenders are fast. What lenders are slow. So when we’re working on an application, if it’s time sensitive, we will work with the lenders that move forward quickly. So we can choose that for you.
So I think as far as speed is concerned I think the mortgage agents and brokers definitely have a heads up. Because we have that flexibility of changing to a lender that has quicker turnaround times. Or again, your bank cannot do that. Lastly, under the service. I’m going to talk about pre-approvals. So a lot of the pre-approvals at the [00:07:00] bank, and even when I was there at the bank, clients would get upset because they think the preapproval means that they’re fully approved on their application.
When in fact it’s actually just a rate hold. So what that means is the rate is locked in. So if the interest rates go up or down, doesn’t matter, you’re locked in a will. Obviously, if they go down, you’re going to get the lower rate, but if they go up you’re protected and you’re not going to have that higher rate.
So that’s primarily how the banks do the, their preapproval letters they’ll punch in your income and some basic information. From you. I’m not doing a full review. And they’ll spit out a number, but that can be dangerous, especially when the market’s so hot and you have to put in cash offers without a condition of financing or else you’re going to lose the home.
You want to make sure you do the pre-approval right. So I know with us, and I can’t speak for every broker here or mortgage agent, but we. Run all the numbers. We try to [00:08:00] get the client’s income documents up front. We have some clients that say I make X amount per month. But when we get their documents, it actually is a lot less.
Because maybe that was just a one-time car allowance or they had a one-off bonus or just something that they’re counting as income, because it’s going to show up on their tax return. But the lenders don’t count because the lenders look at the income differently. They look for consistency. If it’s income that’s happening all the time, they’ll probably use it. But some cases they want a two year history of that to confirm that you’ve had it for a long period of time.
We look at the documents. So we get to know. What the client. Was it incredibly high accuracy. What you can qualify for. And We can also submit this to a lender, get it approved. So you’ll have that in writing as well. But it’s a much different pre-approval process. Then when I was at the bank.
Now the mobile Salesforce at the bank. Everybody’s different, right? Some people just print off the [00:09:00] pre-approval using the calculator. Some of them do take the time and due diligence to run through a live application. So I would say the mobile Salesforce, if you’re going for a preapproval at the bank, that would be who you want to work with.
And not somebody in the actual branch. And just for full disclosure here we work with many banks. Credit unions and mono-line lenders, which has just mortgage. Only lenders. And they’re a valuable asset. So I want you to know this is not. To degrade any of the lenders. Every lender is good in their own niche and category in scenario.
And we do work with them all. I’m just giving you a comparison. Between. My employment statuses in the fields that I’m at. We’re going to take a quick pause and we come back. We’re going to touch on the rates, the options in the feasts.
Okay, welcome back. So I’m going to touch on the rates between the bank and the broker. So the banks, they can generally speaking, [00:10:00] the banks have higher rates than non-bank lenders. However, if you are a long-term client of the bank and you have all your, you know, everything with them, it is possible that sometimes the bank can give you a good exception and you get a really good one. that it’s hard for a mortgage agent or broker to match. However, you have to have every single thing with that lender. And it’s an exception, which means it’s a one-off, it’s not common. So for the most part, I would say eight to 10 out of eight to 10 mortgages. we’re always lower on the mortgage agent and brokers.
’cause we can shop the lenders and we can work with other lenders like mono-line lenders and credit unions and things like that. That don’t have the same type of overhead that the banks have. And because of that, they can price their mortgages a little bit cheaper. So let’s talk about options now with the major banks, usually they’re considered an, a lender, [00:11:00] right? So they have, prime lending. You have to have good credit, a job, all that good stuff, but they do have an alternative channel through some of the banks where if your application is declined, they can send to a lender through the alternative channel.
However, their lender selection is a lot smaller than a mortgage agent or mortgage. pretty much, it was like their own in-house. Mini brokerage. But they only had a handful of lenders. And you could only use them if the bank declined you. So what would happen is what sent it to them. And I find most cases, they weren’t able to get it approved because they only had it just a handful of lenders. But the odd one would get approved. But this is only if the client had 20% down.
Where. Broker or mortgage agent. We have those eight lenders. But we have credit unions as well, which have slightly different policies in certain cases. That we [00:12:00] have be lending. Which again, the banks. At least that I was at had a handful of lenders. And I’m aware of a few other banks that have a, a plan B platform.
So again, just a handful of B lenders. But they don’t have the private lenders. Or the mortgage investment corporations, which are similar to privates, but I find them to have a cheaper. Interest rate. So the bank lacked. All of those. Additional options. So I’m finding that if a client is in a troubled credit scenario,
And it doesn’t even have to be that if it’s a special program, some banks won’t do ’em farms. Some banks They won’t do a new to Canada. Not all lenders do new to Canada. So it just depends on the client’s program and scenario. And what’s going on. So that’s why I think on the mortgage agent or broker side.
That there is more options, but I will say the bank. [00:13:00] Does have some. If you’re declined with them. So in this case, I think the mortgage and the broker side get a slight edge. However, with the options again I do find that the banks are more willing to make exceptions for clients, especially if they have all of their holdings with them.
I remember there was this one client. They wanted. To buy a rooming house. And the bank did not do rooming houses, but because the client had a lot of assets and savings with them. They said, you know what, Scott, he’s a good client. We don’t want to lose him as a client. So we’re going to make this one-time exception and we’ll move forward.
Would this client on this rooming house? And
The bank kind of does have that edge. And the sense of if you have everything and you need an exception. You might be able to get one where if I go to that same lender through the mortgage broker and mortgage agent side, It can be the very same lender. And they’re not so [00:14:00] willing to make that exception.
In certain cases. So I think you have to, if you’re in a really unique scenario and you’ve got everything at one bank, Maybe they’ll make an exception for you and they’ll do what you’re looking to do. But if they’re not. Then I do think a mortgage agent or mortgage broker would be better.
To find you those solutions you need to get approved. When the bank say no. So that covers options. And the last thing is fees. So the banks generally do not charge fees. Unless you are working with their alternative platform channel. Because the B lenders do charge fees. So whenever you’re working with a Bayliner, there’s a fee.
But if you’re just getting a regular mortgage, there is not a fee. Now there are some mortgage brokers that are out there. That even if you’re an alien in client. They will charge you a fee. And I completely disagree with this. We do not do that. At our office. We’re [00:15:00] getting paid from the lender. So we would not charge the client a fee when we’re working with them.
On the side. If we’re working on a B lending deal, and this is mortgage agents and brokers. There’s always a fee for the B lender. And sometimes depending on the B lender, the mortgage broker will charge a fee as well. Depending on the B lenders compensation, the complexity of the application.
How quickly do you need things turn around? All of those things. So there could be a fee from the broker side, as well as the lender side. We do try to keep ours to the minimum or not at all. On that. Not all. Brokers and agents do that. Nor should they have to that’s a business decision that we’ve made that we want to keep our costs low for our clients.
But if somebody’s stopping every single one of their applications and they’re just going to work on yours to make it happen for [00:16:00] you, because you need a quick closing or some unique scenario. In that case, I think a fee is warranted. If the client is, or the mortgage broker agent is going to stop everything and, work with you.
But again, on the bank side, on the alternative side you’ll see some lender fees in there. And then obviously if you’re going to go with private lending and other types of lending, there is fees there as well. But I do give you a word of caution if you’re ever doing. A traditional mortgage.
And the broker tries to charge you a fee. I would leave them. And I know I’m going to make some people upset by saying that. But I’m okay with it because I totally disagree if we’re getting it paid from the lender. And they paid decent. Like it’s very fair. Why would you charge your client to feed?
And I hear that a lot. From all over, like from GTA, Windsor, all over the place, I hear brokers charging fees or. Wanting fees up front. To take on an application. And [00:17:00] those are huge red flags. I, in the beginning I was skeptical to join. And be a mortgage agent. Because I heard all this bad.
Bad reps that, mortgage brokers and agents were getting because of all these fees that they were charging. And then I found out it’s only a small handful, but that spreads like wildfire. So a lot of people think. Broker’s charged fees to use their services. And some of them do.
And if the mortgage engine or broker that you’re looking to have, do your mortgage does want to charge you a fee. I would stop before moving forward. And call another brokerage and ask a second opinion on if they’re going to charge you a fee to work with an Islander. I fully disagree with it. So I just want to make that known that some do charge fees for that.
And I would not entertain paying a fee for an eight lending mortgage. Okay. So I think that really does. Cover the [00:18:00] scenario of a bank versus broker. I tried to be as objective as possible for me. Obviously I left the bank and I’m. On the mortgage broker and agent side here. So I.
Maybe I’m a little bit biased because I like this side better. But the bank does have some good positives. If you’re going to direct to a bank. Such as again, they can make those exceptions for you potentially, if you have all your banking products with them and you have family and stuff.
That also have their banking products with the lender. You might be able to get some exceptions there. So I think that is a key highlight of the banks. Another key highlights. Is that again, if you have everything with them, sometimes it can give you like really good rates, like out of nowhere that are shocking, like not advertised and.
So they, they do that. So I would say in those scenarios, going to a bank. Might be best, however, If you’re looking for more options. And in [00:19:00] most cases, potentially lower rates, right? Because again, it depends like if you’re not a client that can get an exception, then we’re going to have a lower rate for you.
Nine. Maybe eight to nine times out of 10. So you will save. And then the availability. I think that’s huge. If you really need to speak to. Someone on my team or myself. We’re available. I’m recording this radio show at 10 o’clock at night for you to listen to. Because of dedication, right? We’re always here, always around, always working.
If you have any questions and you are looking to move forward with a mortgage and you’re going to consider us. Feel free to give me a call. My office phone number is five one nine. 9 6 0. 0 3 7 0. looking forward to working with you