When it comes time to secure a mortgage, most Canadians start with the familiar: a visit to one of the Big 5 banks. But traditional lenders aren’t the only option. In fact, credit unions, monoline lenders, and mortgage brokers often offer competitive rates, flexible terms, and a more personalized approach.
So how do you know what’s right for you?
Let’s break down the pros and cons of getting a mortgage with a Big 5 bank compared to smaller financial institutions, and why working with a mortgage broker might be the best of both worlds.
What Are Canada’s Big 5 Banks?
The “Big 5” includes:
- RBC (Royal Bank of Canada)
- TD (Toronto-Dominion Bank)
- Scotiabank
- BMO (Bank of Montreal)
- CIBC (Canadian Imperial Bank of Commerce)
These banks are household names and hold a significant share of the mortgage market in Canada.
Pros of Getting a Mortgage with a Big 5 Bank
✅ Familiarity & Trust
Big banks are well-known and well-established. Many Canadians feel comfortable dealing with institutions they’ve used for years.
✅ Convenient Bundling
You may be able to bundle your mortgage with other services like chequing accounts, credit cards, or insurance.
✅ Wide Range of Products
Big banks often offer a variety of mortgage products, including fixed, variable, open, and closed options.
✅ Stability & Security
Large financial institutions offer a sense of long-term security, backed by decades of service and regulation.
Cons of Big 5 Bank Mortgages
🚫 Less Flexibility
Big banks may have stricter qualification guidelines and less flexibility on exceptions for self-employed individuals, those with variable income, or newcomers to Canada.
🚫 Higher Posted Rates
While discounts may be negotiated, their advertised rates tend to be higher than those offered through alternative lenders or brokers.
🚫 Limited Room for Negotiation
You may have to advocate hard for a better rate or features—something a broker could do for you automatically.
What About Smaller Lenders?
Smaller lenders include credit unions, monoline lenders (who only do mortgages), and alternative or B-lenders who specialize in more unique financial situations.
Pros of Smaller Lenders
✅ Lower Interest Rates
Because many of these lenders don’t carry the overhead of traditional banks, they often offer more competitive mortgage rates.
✅ Flexible Qualification Criteria
These lenders may be more accommodating to people with:
- Non-traditional income (self-employed, gig work)
- Lower credit scores
- Unique financial histories
✅ Personalized Service
Many smaller institutions take a more tailored approach, working closely with borrowers to find the best fit.
Cons of Smaller Lenders
🚫 Less Visibility
Smaller lenders may not be as well known, and some people feel uneasy borrowing from a company they’ve never heard of.
🚫 Fewer Branches or Services
Some lenders are online-only or don’t offer everyday banking, which may feel less convenient.
🚫 Early Payout Penalties May Vary
Some smaller lenders have different or stricter rules around breaking a mortgage early—something to watch carefully.
So… Who Should You Choose?
That depends entirely on your situation.
- If you have simple financial needs, good credit, and like keeping things under one roof, a big bank might be fine.
- If you’re looking for a lower rate, flexible options, or are outside of the traditional financial box, smaller lenders may offer more value.
But here’s the thing: you don’t have to choose on your own.
Why Consider a Mortgage Broker Like The Local Broker?
Working with a broker gives you access to multiple lenders—including both the Big 5 and smaller institutions—through one application. It’s like window shopping for mortgages, but we do the legwork.
✅ We advocate for your best rate and features
✅ We match you with lenders based on your needs—not their brand
✅ We don’t charge you a fee (we’re paid by the lender)
✅ We offer local, personalized service, whether online or in person near Guelph
Want to see how your options compare? Try our Mortgage Payment Calculator or get in touch for a no-pressure chat.
Final Word
There’s no one-size-fits-all mortgage. Whether you’re buying your first home, refinancing, or renewing your term, it’s worth comparing offers beyond your everyday bank.
Big banks bring stability. Smaller lenders bring flexibility. A broker brings you both.
