As many of you are aware, the mortgage market in Canada has had a tremendous growth in the number of lenders over the last 10 years. 10 years ago, shopping for a mortgage usually meant inquiring at the four different banks located within your neighborhood. This is definitely not the case today.

While the number of lenders has grown substantially, it may not have grown as much as appears. Most of the major banks not only fund their own mortgages, but they also supply the mortgage funds to other institutions for lending.

Let’s take a look at CIBC as an example. CIBC is definitely a dominant force in the Canadian mortgage market. To maintain this market position they have mortgage funds coming out from many different places. Aside from their branch network, CIBC is responsible for funding mortgages for President’s Choice Financial. If you think that PC Financial’s mortgage products look a lot like FirstLine Mortgages products that’s because FirstLine is also funded by CIBC. What is even more interesting is the fact that they are all priced differently with slight variations in the products.

When you go to look for a mortgage you should always consider these types of non-traditional options. Going to lenders outside of the bank’s branch network can actually save you a lot of aggravation and money compared to negotiating with your own bank branch. Secondary lenders like FirstLine have posted rates that are significantly below those of the big Canadian chartered banks. While rates at these types of institutions are often non-negotiable, they offer considerable cost savings when compared to many other sources.

If you want to stick with your own bank, then this should still not present a problem. Through Mortgage Consultants you can access the head office of every major chartered bank (except the Royal Bank) with one phone call. Dealing with the head offices of banks has some serious advantages to you the consumer:

• Head office mortgage departments don’t have to pay to maintain expensive branch networks to sell their mortgages.
• Head office mortgage lenders are usually dedicated to doing nothing but underwriting mortgages. This means you will likely get an answer quickly.
• These mortgage underwriting areas only pay agents who produce results. This often means that they price their mortgages more competitively than you may get from your branch.
• There is no cross selling. You get your approval and rate based on your mortgage alone. It is not subject to a line of credit, RRSPs and whatever else you likely don’t need.

Bank mortgage reps also are another good alternative. While they are only able to sell one bank’s mortgages, they are highly specialized in what they do. This can mean that you have a better mortgage experience. One word of caution: be careful of the rate you negotiate (these bank mortgage representatives often make a bigger commission by lending to clients at higher rates).

Do yourself a favour and place your loyalties where they are deserved. You wouldn’t buy a new car from a dealer that is more expensive than others, so why would you pay more for a mortgage to stay with one bank? Unless there is a specialized mortgage product that your bank offers, then go where you get the best deal. There is likely very little variation between two similar products from different institutions. Never forget that a penny saved is a penny earned.

Calum Ross is one of Canada’s top ranked mortgage advisors. He has appeared on Canada AM, Investment Television, Report on Business Television, City TV, is an industry speaker and mortgage columnist. He holds both a B.Comm and MBA in Finance.