Should I get a mortgage from my bank or a credit union?
You can get a mortgage from several types of lenders, from government regulated banks to private credit unions. Each lender will offer different interest rates and conditions on repaying the loan, so it’s smart to explore a variety of lender options before making a decision.
One thing to note is that only government regulated mortgage lenders are subject to the federal stress-test. Private lenders may choose to put you through the stress test, but it is possible to find a private lender they will waive the stress test.
No matter what lender you choose, your down payment will be a big factor in your interest rate and the size of the mortgage you take on. If your down payment is less than 20% of the purchase price, you will have to buy mortgage loan insurance.
What is mortgage insurance?
Mortgage loan insurance is a way that banks and lenders protect themselves in case you can’t make your monthly payments. If you’re buying a condo and you have less than a 20% down payment, you have to buy mortgage loan insurance. You can purchase mortgage loan insurance through the Canadian Mortgage and Housing Corporation (CMHC). More on mortgage insurance here.
How do mortgage brokers work?
Mortgage brokers work with a variety of lenders to find you the best mortgage possible. The mortgage options they have access to might be more customized based on their relationship with the lenders, more tailored to your needs, and offer competitive interest rates.
At the end of the day, however, you are still getting your mortgage from the lender. The mortgage broker is just helping you do it.
Mortgage brokers typically offer their services for free to buyers, and then they receive a commission from the lender after they successfully set up a deal.