- Banks lend their own money and sell directly; their mortgage specialists are bank employees and do not need a provincial broker licence.
- Brokers are licensed by the province (FSRA in Ontario, BCFSA in BC, RECA in Alberta), compare lenders for you and are usually paid by the lender.
- Monolines are non-deposit lenders that underwrite mortgages sourced through brokers; you deal with them by phone and online, not at a branch.
- The biggest hidden difference is often the prepayment penalty method, not the rate.
How does getting a mortgage from a big bank work?
A big bank such as RBC, TD, Scotiabank, BMO, CIBC or National Bank lends its own funds and offers its own lineup: fixed and variable terms, open and closed mortgages, and usually a readvanceable plan that combines a mortgage with a home equity line of credit (see HELOCs at the big banks).
Banks are exempt from provincial mortgage broker licensing. In Alberta, for example, RECA’s licensing page lists banks, credit unions, treasury branches and loan and trust corporations among the exempt lenders. Their mortgage specialists work for the bank and only offer that bank’s products.
Strengths: everyday banking, investments and the mortgage under one roof, branch access, readvanceable plans, and room to negotiate if you hold other products. Watch for: the posted-rate IRD penalty method that each big bank describes on its own pages, which can make breaking a fixed term expensive (compare all six on the bank comparison).
How do mortgage brokers work, and who pays them?
A mortgage broker or agent assesses your needs, compares options across lenders, checks lender criteria, prepares the application, explains features and risks and negotiates with the lender. That is how FSRA, Ontario’s regulator, describes the job.
FSRA says brokerages are usually paid by the mortgage lender through a commission, and that some brokerages charge borrowers additional fees. Ontario rules (O. Reg. 188/08) require brokerages to disclose fees, remuneration and incentives and any conflicts of interest, and a broker must recommend suitable products, not the highest commission.
In British Columbia the Mortgage Services Act replaced the Mortgage Brokers Act on October 13, 2026. BCFSA describes licensees’ duties to act in the client’s best interests and to disclose conflicts. In Alberta, brokers must be licensed by RECA unless exempt.
Many brokers can also place mortgages with big banks, so “broker” does not always mean “not a bank”. Ask which lenders they work with and how they are paid on your deal.
What is a monoline mortgage lender?
The Bank of Canada describes mortgage finance companies as non-depository lenders that underwrite and administer mortgages sourced through brokers, funded mainly by selling or securitizing those mortgages. It also notes that brokers give borrowers access to more lenders, including branchless institutions that operate only in the broker channel.
Because they do not have branches or deposit products, monolines compete mainly on rate and terms. Many describe a fixed-rate IRD that compares your rate with their current rate, rather than a posted rate, which can produce a smaller penalty. Check the actual mortgage contract: the method is in the information box at the start of the agreement.
How do banks, brokers and monolines compare?
A general comparison. Individual lenders and brokers vary, so confirm each point in writing.
| Big bank | Broker | Monoline (via broker) | |
|---|---|---|---|
| Who you deal with | Bank mortgage specialist or branch | Licensed broker or agent | Broker at the start, then the lender’s service team |
| Choice of lenders | One | Several, often including some banks | One, chosen through the broker |
| Who pays the adviser | The bank employs its specialist | Usually the lender, by commission; some charge fees | Usually the lender pays the broker |
| Regulation of the adviser | Federal bank regulation; exempt from broker licensing | Provincial licence (FSRA, BCFSA, RECA and others) | Lender: varies; broker: provincial licence |
| Typical fixed-rate penalty wording | Posted-rate IRD (see each bank) | Depends on the lender chosen | Often IRD on a contract or current rate |
| Readvanceable HELOC | Usually available | Depends on lender | Less common |
| Other banking | Same bank | Separate | Separate |
Should you get your mortgage from a bank, a broker or a monoline?
- Get one quote from your own bank and one from a broker, for the same term and rate type.
- Compare total cost over the term, not just the rate: run both through the bank vs broker calculator, including a “break after 3 years” scenario.
- Ask each lender how its penalty is calculated, what prepayment privileges you get, whether the mortgage is portable and whether it can be readvanced.
- Ask your bank to match the best offer. Then score the final rate on IsThisAGoodRate.ca.
Worked example: a big bank vs a monoline on the same $500,000
Both are 5-year fixed, 25-year amortization. RBC’s published 5-year special is 5.14% (posted 6.19%, read November 2, 2026). First National, a monoline, published 5.15% for a 5-year conventional mortgage (effective 2026-11-09, collected 2026-11-13 in the MITEY lender-rate dataset).
Kept to maturity, RBC 5-yr special costs $241 less. Broken after 36 months with posted rates 1 point lower, First National 5-yr conventional costs $4,064 less, because RBC compares with its posted rate for the time left, less your discount (penalty $13,567), while the contract-rate method gives $9,358.
| RBC 5-yr special | First National 5-yr conventional | |
|---|---|---|
| Rate | 5.14% | 5.15% |
| Monthly payment | $2,948.00 | $2,950.87 |
| Cost if kept 5 years | $120,385 | $120,626 |
| Penalty if broken at 36 months (rates −1 pt) | $13,567 | $9,358 |
| Cost if broken at 36 months | $87,531 | $83,467 |
Computed by this site’s engine from each bank’s published rates (November 2, 2026) and the rules cited below. An example, not a quote.
What this means for you
- If you’re confident you’ll keep the mortgage five years, the lower rate usually wins: compare total interest.
- If there’s a real chance you’ll sell or refinance, ask each lender for its penalty method in writing; a posted-rate IRD can outweigh a lower rate.
- Ask your own bank to match a broker or monoline quote; then check whether it carries the same prepayment and portability terms.
- Use the bank vs broker calculator with your actual quotes; it shows the break month at which the cheaper offer flips.
Rules change. Every figure on this page links to the official source and shows when we checked it. If something looks out of date, tell us and we will re-check.
Frequently asked questions
Do I pay a mortgage broker?
Usually not directly for a standard residential mortgage: FSRA says brokerages are usually paid by the lender through a commission. Some brokerages charge borrowers fees, which must be disclosed, so ask before you sign.
Can a broker get me a big-bank mortgage?
Some can: several big banks accept mortgages through brokers. Ask the broker which lenders they place mortgages with.
Is a monoline lender safe?
A monoline is a lender, not a deposit-taker, so you are the borrower, not the depositor: the main risks for you are service and renewal terms, not deposit safety. Check who the lender is, read its renewal and penalty terms and look it up on CanadianBanks.ca if it is a federally regulated institution.
Sources
- Working with a mortgage professional — FSRA (Ontario), checked Oct 31, 2026
- Mortgage brokerage disclosure requirements — FSRA (Ontario), checked Oct 31, 2026
- Mortgage Services Act, rules and regulation — BCFSA, checked Oct 31, 2026
- Mortgage services licensee duties — BCFSA, checked Oct 31, 2026
- Which industry? (mortgage broker licensing and exemptions) — RECA (Alberta), checked Oct 31, 2026
- The Role of Mortgage Finance Companies in Canada’s Mortgage Market (Financial System Review) — Bank of Canada, checked Oct 31, 2026
- Reduce or avoid prepayment penalties — FCAC, checked Oct 31, 2026
- Financial Consumer Protection Framework Regulations (SOR/2021-181) — Justice Laws, checked Oct 31, 2026
Educational information only, not financial, legal or tax advice. BankMortgages.ca is independent and is not affiliated with, endorsed by or paid by any bank named on this site. Bank terms change: confirm every rate and term with the lender and the official sources linked on each page before you act. Read the full disclaimer.
