Scott DIllingham: 00:21

Welcome to today's show. Today, the topic is going to be banks versus brokers. So what it's like working for 2 different types of lenders all with the same goal to help you accomplish your dreams of owning your home. So I

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had many years in the bank more so than working for a mortgage brokerage.

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I know both sides. I know the pros and cons of both, and

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I'm gonna share them with you here. So, when you're considering buying a home or investment property, anything to do with real estate, you'll be able

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to make an educated decision on which lender type you should go with. So I'm gonna be touching on the service between the 2, the rates, the options, and

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the fees. Okay. So we're gonna cover those 4 segments and then at the end of

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the show, you're gonna be

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able to determine who the best lender is

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for you. So I'm gonna make this very fair for both sides. I'm not gonna make it pro one side or the other. I want you

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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. They have the training to provide the best service. And, I learned a lot about customer service dealing with the bank.

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Things like, the customer is 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 will 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.

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It is important to give the service, but at the bank, I found that they teach you how to be the best that you can be with customer service. Now there's a line though in the sand with the 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 9 to 5, getting a salary, they may not share the same drive that I did.

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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 to be really good. In both fields, whether it's a bank or on the broker side, you're gonna get people that have terrible customer service. It's gonna happen.

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It doesn't matter what industry, whether it's retail, restaurants, it it doesn't matter. You're gonna get people that 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.

Scott DIllingham: 03:32

Right? So a broker or mortgage agent, I'm classifying them under the same thing because 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. 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.

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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 9 to 5 or maybe they'll work 11 to 7 if the bank's open late. So you have to get in there at those certain times or else you don't get that service you need.

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We actually receive lots of customers from the bank because they said, oh, they couldn't meet me until 2 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 booked, so they're not as flexible. So I think as far as hours, I think either a mobile sales professional at

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the bank or a mortgage broker mortgage agent is going

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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 gonna be able to respond to you, where a broker or mortgage agent or mobile Salesforce for

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the banks will be around and available to, to help you. Oh, speed. This is where I

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think that the, mortgage broker or mortgage agent

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side of things is actually a lot better than the banks. I remember when I was at the

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bank and the busy summer seasons, some applications would take 2 to 3 weeks, to review. And this is purchases. Like, even if they had a 5 day condition period, they're still taking 2 to 3 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 6 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.

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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 your one of your top guys. You gotta help me out with some live deal. We gotta move forward.

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And that would help sometimes. But other times, they would say, sorry. We're too busy. And it would just the client's file had delayed and we would fight it

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and there's nothing that we could do because we only had that lender. So you're stuck with the lender's capacity when you're just going to 1. Now on the mortgage agent side, we know I'm assuming that everybody knows, 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.

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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 gonna talk about preapprovals. So a lot of the preapprovals at the 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. Obviously, if they go down, you're gonna get the lower rate.

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But if they go up, you're protected and you're not gonna have that higher rate. That's primarily how the banks do the their preapproval letters. They'll punch in your income and some basic information, from you. 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 gonna lose the home.

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You wanna make sure you do the pre approval. So I know with us, I can't speak for every broker here or mortgage agent, but we run all the numbers. We try to get the client's income documents upfront. We have some clients that

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say I make x amount per month, but when we

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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 gonna 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 2 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 with an incredibly high accuracy, what you can qualify for.

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And, we could also submit this to a lender, get it approved so you have that in writing as well, but it's a much different preapproval process than when I was at the bank. Now the mobile Salesforce at the bank, everybody's different. Right? Some people just print off the 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 pre approval at the bank, that would be who you wanna work with and not somebody in the actual branch.

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Just for full disclosure here, we work with many banks, credit unions, and monoline lenders, which

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is just mortgage only lenders.

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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 and scenario, and we do work with them all. I'm just giving you a comparison between my employment statuses and the fields that I'm in. We're gonna take a quick pause and when we come back, we're gonna touch on the rates, the options, and the fees. Okay.

Scott DIllingham: 09:58

Welcome back. So I'm gonna touch on the rates between the bank and the broker. Oh, the banks can, generally speaking 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 everything with them, it is possible that sometimes the bank can give you a good exception and you get a really good rate 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. For the most part, I would say 8 to 10 out of 8 to 10 mortgages.

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We're always lower on the mortgage agent and broker side because we can shop the lenders and we can work with other lenders like monoline 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.

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So let's talk about options now. With the major banks, usually they're considered an e lender, right? So they have prime

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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 broker. Pretty much, it was like their own in house

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mini brokerage, but they only had a handful of lenders and you

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could only use them if the bank declined you. So what would happen is we'd send it to them and I find most cases, they weren't able to get it approved because they only had just a handful of lenders. The odd one would get approved, but this is only if the client had 20% down. Where broker or mortgage agent, we have those a lenders, but we have credit unions as well, which have slightly different policies in certain cases. Then we have b 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.

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So again, just

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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

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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, ARMs. Some banks, they won't do, new to Canada.

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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 does have some if you're declined with them. So in this case, I think the mortgage agent and broker side get a 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.

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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 wanna lose him as a client, so we're gonna make this one time exception and we'll

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move forward with this client

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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 the mortgage broker and mortgage agent side, it can be the very same lender and they're not so 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 1 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 banks say no.

Scott DIllingham: 14:21

So that covers options, and the last thing is fees. 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 b lender, 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 a lending client, they will charge you a fee.

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And, I completely disagree with this. We do not do that at our office. We're getting paid from the lender. So we would not charge the client a fee when we're working with them on the a 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.

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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 you need things turned 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

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at all on that. Not all brokers and agents do that,

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nor should they have to. That's a business decision that we've made that we, we wanna keep our costs low for our clients. But if somebody's stopping every single one of their applications and they're just gonna work on yours to make it happen for you because you need a quick closing or or some unique scenario, In that case, I think a fee is warranted if the client is or the mortgage broker agent is gonna stop everything and we're gonna 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 gonna go with private lending and other types of lending, there, there is fees there as well.

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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 gonna get paid from the lender and they pay decent, like it's very fair. Why would you charge your client a fee? 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 upfront to take on an application, and those are huge red flags.

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In the beginning, I was skeptical to join and be a mortgage agent because I heard all these 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 brokers charge fees to use their services and some of them do. And if the mortgage agent 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 a lender.

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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

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a fee for an a lending mortgage. Okay. So I

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think that really does cover the 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 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.

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So I think that is a key highlight of the banks. Another key highlights. Is that again, if you have everything with them, sometimes they 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.

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However, if you're looking for more options and in most cases, potentially lower rates, right? Because it again, it depends. If you're not a client that can get an exception,

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then we're gonna have a lower rate for you 9 maybe 8 to 9 times out of 10. So you will save. And then, the availability,

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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.

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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 519-960-0370.

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Looking forward to working with