Mortgage Lenders and Brokers in Canada: Where to Get a Mortgage

There are two ways to get a mortgage in Canada: straight from a lender, or through a mortgage broker who finds a lender for you. Either way, rates and conditions can differ between lenders for similar mortgages, so talk to more than one before you commit. Compare more than the rate: prepayment privileges vary from lender to lender, so also check how the penalty for breaking the mortgage early is worked out and whether a standard or a collateral charge is registered on your home. If your credit, income or residency makes approval harder, start with the guides in this section.

The types of lenders at a glance

The Financial Consumer Agency of Canada (FCAC) lists banks, caisses populaires, credit unions, mortgage companies, insurance companies, trust companies and loan companies as mortgage lenders. Brokers sit alongside them: they don’t lend, they arrange the mortgage with a lender.

When your mortgage is with a federally regulated institution such as a bank or a federal credit union, the lender must give you set disclosures, including the cost of borrowing and a renewal statement before your term ends (see the renewal rule under negotiating your rate). Federally regulated lenders also require the mortgage stress test, and other lenders may ask you to pass it. For other financial institutions, your province or territory is the regulator.

Alternative and private lenders are covered on their own pages: B-lender mortgages and private mortgage lenders. For named lenders side by side, see the best mortgage lenders in Canada.

A broker, a bank or an online lender

A bank or credit union. You deal with the lender itself, which lends the money directly to you. A federally regulated bank must offer and sell you products that are appropriate for you. Different lenders may have different rates and conditions for similar products, so get quotes from others too.

A mortgage broker or agent. A broker is licensed by the province and acts as an intermediary between you and the lender. Because brokers deal with many lenders, they may offer a wider range of mortgages, but brokers don’t have the same lenders as one another, so ask which ones they work with. Brokers usually charge you nothing and are paid a commission by the lender. In Ontario, a Level 1 mortgage agent can arrange a mortgage from a traditional lender such as a bank or credit union, while a Level 2 agent or a broker can also place it with alternative and private lenders. Before you sign, an Ontario broker or agent must tell you in writing about any material risks of the mortgage. You can check a licence with your province’s regulator, such as FSRA in Ontario or BCFSA in British Columbia, which keeps a public register. How brokers are paid and licensed, and the main brokerages, are on the best mortgage brokers page.

An online lender or online brokerage. An online lender lends to you directly; an online brokerage is a broker, and it needs a provincial licence: in Ontario for regulated mortgage brokering activities, and in British Columbia for providing mortgage services, unless an exemption applies. Ask which one you are dealing with, since the answer tells you whether you get one lender’s products or a broker’s choice of lenders.

Rate comparison sites

Treat a rate you see on a rate comparison site as a starting point: your lender offers you a rate when you apply, and lenders may have different rates and conditions for similar products. Use the best figure you find as a benchmark: at renewal, for example, telling your lender about offers from other institutions or brokers may get you a rate below the one in your renewal letter.

Which fits:

• You want one institution for your banking and mortgage: a bank or credit union, with outside quotes in hand.
• You want several lenders compared for you, or your file is unusual: a broker.
• You are comfortable applying online: an online lender or online brokerage, once you know which it is.

Banks or monoline lenders

Monoline lenders are mortgage finance companies: they take no deposits, and they lend and administer mortgages that come to them through brokers. A 2016 Bank of Canada review found that their competition had brought borrowers lower mortgage rates and more access to credit. So a broker may offer you a lender you don’t know.

What matters is the contract, not the brand. Each lender sets its own lending guidelines and policies, and prepayment privileges vary from lender to lender. Before choosing a lender for a lower rate, check three things in the offer: how it calculates the penalty if you break the mortgage, what prepayment privileges it allows, and whether it registers a standard or a collateral charge. This federal renewal rule covers federally regulated lenders; with another lender, check your province’s rules and note your renewal date yourself.

Comparing offers

Put each offer’s terms side by side, and read the terms and conditions before you sign. A federally regulated lender must disclose the cost of borrowing over the term, which can include administrative charges and charges for a broker, appraisal or inspection, and the annual percentage rate (APR) when it differs from the interest rate.

On a fixed-rate mortgage the penalty is usually the higher of 3 months' interest on what you still owe and the interest rate differential (IRD). How each method is worked out is on how mortgage penalties are calculated. To see what a different rate does to the payment, use the mortgage calculator.

Negotiating your rate

The rate a lender first offers isn’t final: you may be able to negotiate a lower one, and shopping around before you commit could save you thousands of dollars. The rate you sign can be below the lender’s posted rate, which FCAC calls a discounted rate.

Get quotes first. Talk to several lenders and compare as many mortgages as you can before you go back to the one you prefer. Then tell your lender about the offers you received from other institutions or brokers; at renewal you may qualify for a lower rate than the one in your renewal letter.

Negotiate more than the rate. Ask for better prepayment privileges or a longer rate hold, and when you move at renewal, ask the new lender to pay some or all of the costs of switching, such as discharge, appraisal and administration fees.

Use your renewal. You don’t have to renew with the same lender, so start shopping a few months before your term ends. If you do nothing, the renewal may be automatic, and you may not get the best rate. If your mortgage is with a federally regulated lender, such as a bank, the lender must send you a renewal statement at least 21 days before your term ends, or tell you by then that it won't renew; the statement shows the balance, interest rate, payment frequency, term and any fees, and says the rate offered won't go up before the renewal date. The steps are in the mortgage renewal guide.

A worked example.

Questions to ask

Beyond the items in the comparison table, ask:

• Are you a licensed broker or agent, or do you work for the lender? Which lenders do you work with?
• How are you paid for arranging this mortgage?
• How long do you guarantee the pre-approved rate, will I get the lower rate if rates fall during that time, and can the pre-approval be extended?
• What is the cost of borrowing over the term, and where is it in the disclosure?
• What would it cost to move this mortgage to another lender at renewal?
• What are the material risks of this mortgage? (an Ontario broker or agent must disclose them in writing)

Guides in this section

Getting approved

• Mortgage pre-approval: what it is and isn’t, how to get one, and the rate hold.
• How to apply for a mortgage: documents, income proof, underwriting, approval time and a declined application.
• Credit score needed for a mortgage: the score lenders look for and how to raise it.
• Mortgages with bad credit: options by score, after a bankruptcy or consumer proposal.
• Self-employed mortgages: how lenders count self-employed and gig income.
• Mortgages for newcomers: newcomer programs, proof of income and credit.
• Non-resident mortgages: buying from abroad and the foreign buyer ban.
• Co-signing or guaranteeing a mortgage: co-borrowers, co-signers and joint mortgages.

Lenders and brokers

• Best mortgage lenders in Canada: named lenders compared, with a first-time buyer view.
• Best mortgage brokers in Canada: what brokers do, how they are paid and licensed, and the online brokerages.
• B-lender mortgages: the next stop after a bank declines, and the way back.
• Private mortgage lenders: who lends, what it costs and the exit plan.

Today’s rates are on mortgage rates.