“If a mortgage broker is free, who pays them?” On most residential mortgages in Canada, the lender does: it pays the brokerage a commission when the mortgage funds, and the borrower pays the broker nothing. The exceptions are private mortgages, some files with damaged credit or unusual income, and brokers who work for a flat fee. This page covers each way brokers and agents are paid and when the bill reaches you. More guides on brokers and lenders are in the lenders and brokers hub.
Do you pay a mortgage broker? At a glance
| Your situation | Do you pay the broker? | Does the lender pay the broker? |
|---|---|---|
| Standard borrower, prime lender (bank, credit union or monoline lender) | No | Yes |
| B-lender mortgage | Sometimes | Yes, usually less than a prime lender |
| Private mortgage | Usually, yes | Often no |
| Complex or very small file with a prime lender | Occasionally, a flat fee | Yes |
| Fee-based broker | Yes, a flat fee | Any lender commission may be passed back to you |
Dominion Lending Centres, one of the large broker networks, puts the general rule this way: brokers “generally do not charge fees or commissions to borrowers when arranging mortgages with regulated bank lenders”, while “fees or commissions may apply if a mortgage is arranged through a non-regulated lender, or if a borrower’s credit profile requires additional effort”.
The standard payment model
| Component | How it works | Typical amount |
|---|---|---|
| Finder fee (upfront) | One-time commission paid by the lender when the mortgage funds | 0.50%–1.10% of the mortgage amount |
| Trailer fee (ongoing) | Yearly payment from some lenders while you stay with them | 0.10%–0.15% of the outstanding balance |
| Volume bonus | Extra pay for brokerages that send a lender a lot of business | Varies |
| Cost to you | Nothing, for a standard prime mortgage | $0 |
Finder fee example
| Mortgage amount | Finder fee at 0.80% | Finder fee at 1.10% |
|---|---|---|
| $300,000 | $2,400 | $3,300 |
| $500,000 | $4,000 | $5,500 |
| $700,000 | $5,600 | $7,700 |
| $1,000,000 | $8,000 | $11,000 |
The lender pays the finder fee to the brokerage. It doesn’t add to the amount you borrow on a prime mortgage, and the brokerage passes a share of it to the agent who handled your file.
How each payment type works
1. Finder fee (upfront commission)
The finder fee is the main way brokers earn their income. It’s paid once, when your mortgage funds on closing day.
| Factor | Detail |
|---|---|
| Who pays it | The lender |
| When it’s paid | When the mortgage funds |
| Typical range | 0.50%–1.10% of the mortgage amount |
| What sets the amount | The lender, whether the mortgage is insured, and the term |
| Who receives it | The brokerage, which pays the agent a split (commonly 50%–85%) |
Commission by mortgage type:
| Mortgage type | Typical finder fee | Why |
|---|---|---|
| Insured (high-ratio, under 20% down) | 0.80%–1.10% | Mortgage default insurance takes the default risk off the lender |
| Insurable (20%+ down, meets insurance rules) | 0.65%–0.90% | Moderate risk, moderate commission |
| Uninsured (most refinances, and other mortgages without default insurance) | 0.50%–0.70% | More lender risk, lower commission |
| B-lender | 0.50%–1.00%+ | Varies widely; may come with a borrower fee |
2. Trailer fee (ongoing commission)
Some lenders pay an ongoing trailer for each year you stay with them.
| Factor | Detail |
|---|---|
| Who pays it | The lender |
| When it’s paid | Yearly |
| Typical range | 0.10%–0.15% of the outstanding balance a year |
| Purpose | Rewards brokers for placing mortgages that stay with the lender |
Trailer fee example ($500,000 mortgage, 0.12% trailer):
| Year | Outstanding balance | Trailer fee |
|---|---|---|
| 1 | ~$490,000 | ~$588 |
| 3 | ~$465,000 | ~$558 |
| 5 | ~$435,000 | ~$522 |
Not every lender pays a trailer. Some pay a higher upfront finder fee and no trailer; others pay a lower finder fee with a trailer attached.
3. Volume bonuses and status programs
| Bonus type | How it works |
|---|---|
| Volume bonus | An extra 0.05%–0.15% for brokerages that pass yearly funding targets |
| Status tier | Top-producing brokers get preferred access and faster approvals |
| Efficiency bonus | Pay for clean, complete files that are quick to underwrite |
| Lender events and trips | Some lenders offer conferences or trips to top producers |
Lenders pay these bonuses to brokerages; borrowers don’t pay them. They’re a normal part of the business, but they’re also where a conflict of interest can come from (see below).
When brokers charge borrower fees
| Situation | Typical borrower fee | Why |
|---|---|---|
| B-lender mortgage | None to 0.50%–1.50% of the mortgage | B-lenders pay lower commissions |
| Private mortgage | 1.00%–3.00% of the mortgage | Private lenders often pay no commission, so the borrower’s fee is the broker’s pay |
| Complex or high-effort prime file | Occasionally a flat fee | Many lender submissions or hard-to-document income |
| Very small mortgage | A flat fee ($500–$1,500) | The commission on a small mortgage may not cover the work |
A private mortgage often comes with other costs on top of the broker fee, such as a lender fee, the lender’s legal fees and an appraisal; private mortgage lenders covers how they price.
Fee-based brokers
A few brokers work on a fee-for-service model: they charge you a flat fee agreed upfront and pass any commission the lender pays back to you, as a rate reduction or a rebate. Because the broker earns the same whichever lender you choose, the model removes the pull toward higher-commission lenders. The trade-off is that you pay a fee you wouldn’t pay a broker paid by the lender on a prime mortgage.
Rules on borrower fees
| Rule | Detail |
|---|---|
| Disclosed before you commit | Fees are set out in writing in the broker agreement |
| Not hidden | Provincial regulators require brokers to disclose what they’re paid |
| Negotiable | Borrower fees aren’t fixed by law |
| How they’re paid | Taken from the mortgage proceeds or paid separately, depending on the lender |
| No advance fee in Ontario on most mortgages | On a mortgage of $400,000 or less, an Ontario brokerage can’t require or accept an advance payment or deposit for its services |
Disclosure rules
Mortgage brokers are licensed and supervised by provincial regulators, listed by province in who regulates mortgage brokers. Each province sets its own disclosure rules. In Ontario, the standards of practice for brokerages say that for each mortgage or renewal a brokerage presents, it must tell you in writing
- whether it has received, may receive or will receive a fee or other remuneration from anyone else (such as the lender) in connection with the mortgage;
- if so, who pays it and the basis for calculating the amount;
- whether the agent or broker handling your file may receive an incentive from anyone else, and what it is.
The brokerage must also get your written acknowledgement that it made those disclosures, and it must take reasonable steps to make sure the mortgage it presents is suitable for your needs and circumstances.
Whatever province you’re in, the direct question works: “What is your compensation on this mortgage: from the lender, from me, or both?”
The conflict of interest question
Because lenders pay different commissions, it’s fair to ask whether a broker recommends the best mortgage for you or the one that pays them most.
| Lender A | Lender B | |
|---|---|---|
| Rate | 4.30% | 4.25% |
| Finder fee on $500,000 | 1.00% ($5,000) | 0.65% ($3,250) |
| Better for | The broker | The borrower |
On a $500,000 mortgage amortized over 25 years, Lender A pays the broker $1,750 more, and costs you about $1,200 more in interest over a 5-year term.
What keeps the risk in check
| Safeguard | How it helps |
|---|---|
| Suitability duty | In Ontario, a brokerage must take reasonable steps to make sure the mortgage it presents suits your needs |
| Disclosure | Written disclosure of who pays the brokerage, as above |
| Competition | Rates from other brokers and lenders are easy to compare |
| Referrals | Most brokers rely on repeat clients and referrals |
Questions that protect you
- Is this the lowest rate available for my file, and if not, why is the recommended lender better?
- How does this lender calculate its prepayment penalty? A lower rate with a costly penalty can cost more if you break the mortgage (how penalties are calculated).
- Do you receive the same commission from every lender you’re recommending?
- Am I paying you anything directly?
- How does this offer compare with another broker’s, an online lender’s or my bank’s?
More questions about the mortgage itself are in the questions to ask a lender or broker, and how to compare brokers is in how to choose a mortgage broker.
Mortgage agent vs mortgage broker vs bank specialist
| Feature | Mortgage agent | Mortgage broker | Bank mortgage specialist |
|---|---|---|---|
| Licence | Provincial agent (or associate) licence, working under a brokerage | Provincial broker licence; can supervise agents | A bank employee |
| Lenders | Many, through the brokerage | Many, through the brokerage | One bank |
| How they’re paid | A split of the lender’s commission | A split of the commission, or the brokerage’s share | Salary plus bonus or variable pay from the bank |
| Possible conflict | May favour higher-commission lenders | The same | Offers only the bank’s own products |
| Fee to the borrower | Rarely | Rarely | No |
Both models have conflicts. A broker’s is between lenders paying different commissions; a bank specialist’s is that they can only offer their employer’s products, whatever a competitor has. The differences between the channels are in mortgage broker vs bank vs online lender, and what a broker does day to day is in what a mortgage broker is. The other side of broker pay, from a career point of view, is in how to become a mortgage broker.
The bottom line on broker pay
| Fact | Detail |
|---|---|
| Standard prime mortgages | Free to you; the lender pays the broker |
| Typical commission | 0.50%–1.10% of the mortgage, once, plus a trailer at some lenders |
| Non-standard mortgages | You may pay a broker fee, disclosed before you commit |
| Fee-based brokers | A flat fee, with lender commissions passed back to you |
| Conflicts | Real but checkable through disclosure and comparison |
Sources
- Ontario Regulation 188/08, Mortgage Brokerages: Standards of Practice (disclosure of fees, suitability, advance payments). ontario.ca/laws
- Dominion Lending Centres, home page note on broker fees. dominionlending.ca