Mortgage Broker Fees

mortgage-broker-fees A client called us this week upset that his broker charged him a $5000 broker fee.  So we asked where the broker got him approved.  Much to our amazement, it was at a major “A”-lender.  More surprisingly, the client’s credit was excellent.

To us, this is almost criminal.  There was no reason in the world this client should have paid this broker that kind of fee.  The lender was already paying the broker a finder’s fee.  He didn’t need to gouge the client for more.

This type of thing drives us batty.  Our industry works hard to educate people about the benefits and integrity of professional mortgage planners.  Every profession–doctors, police officers, even priests–have bad apples, but this behaviour hits close to home.

You might wonder why we’re bringing this up in front of thousands of readers.  The goal here is to warn consumers (and other planners) about what we consider rogue brokers.  This is far from typical practice in our industry and people need to know that.

When is a broker fee warranted?  Here are sample cases where such fees may apply (this list is not exhaustive):

  • Commercial Mortgages:  Unlike residential lenders, commercial lenders often don’t pay finder’s fees.  So there is no other way to compensate planners for the value they add in arranging hard-to-place commercial financing. Moreover, commercial deals take a huge amount of time and often never close for various reasons.  In many cases, a planner can do 10 residential mortgages (and be compensated for them) in the time it takes to do one commercial deal.
  • Private Mortgages:  When normal lenders won’t approve a client, private (“hard money”) lenders are often the last hope.  Like commercial lenders, private lenders don’t usually pay finders fees.  In these cases, broker fees compensate the planner for his/her time and for use of their private lending network. (Building a good network of private lenders is very difficult. We’ll do a story on that sometime.)
  • Small Loans:  A small deal (e.g. a $30,000 second mortgage) takes up just as much time–and often more–than a large deal.  Really small mortgages also divert the planner’s attention from other clients who deserve equal service.  Because the finder’s fee on these deals is tiny, planners sometimes charge a small and reasonable broker fee.

Remember, in Ontario a broker is not allowed to ask for any fees up front on residential mortgages under $200,000.  For mortgages over $200,000, borrowers should get it in writing that any advance fees will be refunded if suitable financing is not provided.

In BC, it’s illegal for a broker to ask for fees up front on a residential mortgage.

Generally speaking, advance broker fees on most residential mortgages should be a big red flag.  (Click here for a related story).  We know of no reputable mortgage planners that charge them, except in the aforementioned circumstances.

Even if it’s a subprime (bad credit) client, lenders pay brokers well enough that extra fees shouldn’t come up–apart from the cases above.

  1. Thanks for keeping it Honest! Are there not Other instances where Broker Fees are also warranted e.g “Refinance” – 2nd Mortgages etc.?
    Keep up the Great work!

  2. Hi Carrie,
    Thanks for the note. Yes there are other case where broker fees may apply. We added “(this list is not exhaustive)” just to reinforce that point. If you or our other readers have specific examples of scenarios where such fees should apply, we’d love to hear them!

  3. The broker that I used asked for a refundable deposit when I was shopping around. It was just a small amount so as not to waste his time, it was small enough that it wouldn’t really stop me from going to a better deal somewhere else, but enough so that he knew we were serious about getting him to work on our account. When our home closed and the mortgage was finalized he refunded the deposit right away. I think this is an ideal setup, if I didn’t use the broker for the mortgage when we closed on the house then he would have kept the deposit for his time.

  4. Instead of an upfront deposit you can also request the client sign a 90-day exclusivity agreement. I think it is reasonable to expect some kind of commitment from a client before we spend hours on their behalf.

  5. really, why should you get an exclusivity agreement or an advance deposit? there are lots of other industries (r/e agents, insurance, and lots of others) where it’s just part of the business you work in – you invest time in attracting clients, and some of them don’t materialize. it’s just part of how things work – if you want the deals to close, then stay competitive!

  6. I recently switched my mortgage and used a mortgage brokers services, I flat out asked upfront if there is a brokers fee and his response was “no there is no brokers fee I do enough business and get enough money from the lenders that we dont require brokers fees, what do you care I just got you a mortgage for 3.5%” After everything was said and done my lawyer called me today to let me know he states I owe him a $1800 brokers fee. Is there anything I can do about this? I live in ontario

  7. I am from Ontario and planning to work with a mortgage broker.I am glad that I stumbled on your site. How can I ensure what happened to Carl doesn’t happen to me?

  8. Carl, your broker is not allowed to charge a fee for an “A” deal, which yours is if you got a rate of 3.5%, are you sure it’s not the legal fees from your lawyer, check the documents signed, including your statement of mortgage, if it is your broker report him/her to FSCO and tell him to take a hike.

  9. I live in B.C. Recently, a mortgage broker worked to get us a mortgage. He now insists we sign a form that states that if “for any reason” we do not go with this mortgage, we are required to pay him (the broker) 1% of the mortgage amount. Is this legitimate? I am surprised, as there has been no mention of this potential “fee” until now. I have never worked with a broker before.

  10. I also live in BC and work with a good broker–never had to sign any such form. I’d be looking for another broker; I can recommend ours if interested.

  11. I find that dishonest – I’m a mortgage broker myself and as mentioned before ; we charge a fee up front only when we have to go to a private lender. The main banks have a commission structure for brokers. If it was NOT discussed at the begining, you are NOT responsible for it.

  12. I live in Ontario and recently tried to use a mortgage broker. They wanted every kind of fee possible on an ez to place first and I have perfect credit. These guys were so dishonest it was unbelievable. Lucky I didnt need the money so I told them to go jump in the lake. This is the third time a broker has tried to shaft me. I will never go to a broker again.

  13. Hi David,
    It’s very unfortunate that you had these experiences and hopefully you eventually found resolution.
    That said, I’d caution against extrapolating your experiences to be a reflection of the whole industry. If your mortgage was in fact easy to place, then the great majority of brokers would charge no fees (were it a prime mortgage) or a very reasonable broker fee (if a non-prime mortgage).

  14. Hi, we recently had to redo our mortgage. I was working with a broker but in the end he was not able to find us suitable financing…we found a private lender oursleves. Problem is now this broker has mentioned that he should be getting his $2000 broker fees for his efforts(we got a mortgage for $127,000). I’m thinkin no way…fees for something that in the end he was not able to do for us….not going to happen! He never mentioned any upfront fees and he only talked about the $2000.00 when we thought he had found something…which he diidn’t.
    Am I right in my thinking?
    Lori from Ontario

  15. I am a mortgage associate in Calgary – I disagree with the claim that a broker should not charge for an “a” mortgage when the client has good rates – AS LONG AS THEY ARE CONSISTENT. What I mean by this is the broker should not just charge one person $5k and then charge a different customer $0.00 (if they are both in the same situation). If the broker wants $5k for their services – they can charge it (it’s a free market) BUT you won’t get many clients agreeing to it and therefore the fees charged on an “a” mortgage should be close to none (or nothing).
    There are many many other variables than just the type of lender and credit. There is time needed to close, debt servicing, equity remaining etc. One other good thing about a broker who charges lots is that they are willing to work extremely hard to make any deal work because they are being paid so much – also these brokers (since they charge so much) will not have an abundance of clients and can therefore work extremely fast for clients that need it.
    Lastly – it is unfair to criticize this broker for charging $5k simply because it was with an “a” lender – with that logic you are penalizing the broker for outstanding work – should he have taken the client to a private lender instead? Perhaps the broker was simply ta magician and got it done at an “a” lender when no one else could.

  16. hmmmm, both hands in the cookie jar! I disagree on so many counts. The one thing that banks can never compete on with a independent mortgage broker is free & unbiased mortgage advice and offering multiple options that serve in the borrowers best interest.
    The fact that a “A” list borrower can often get a mortgage rate matched by a bank but will rarely get free expert knowledge and choice is IMO what will grow a successful brokers business.
    If your that good and I am paying you for your services, then you better provide two things. 1. deduct the full commission earned from the lender from my rate. 2. Significantly increase your liability insurance because when a client pays you for your so called expert advice and your wrong, the lawsuits will come flying out of your arse!

  17. I can see charging a small admin fee if you offset it with better rates, extra services, etc. However anything more than that is double-dealing in my books. Brokers should be satisfied with the compensation lenders pay them on A deals. Some broker houses and lenders explicitly prohibit brokers from charging broker fees on A business.

    1. I used a broker for my Mortage. This is my first time buying a home so there are so many things I don’t know with this process. I recently signed my mortgage papers and realized that included in my Mortage was a brokers fee of $2000.00. I asked her what are these fees and she said ” the lender gives us a part of the money”.. And tried to change the topic…. From there I’ve been suspicious… Can someone please clarify this for me?? She said the broker fees are charged by the bank… So I’m guessing they will give her the $2000.00…. But here’s why I’m uncomfortable…. She is charging me 1500.00 separately … She told my husband and I that we can make small payments and she’s flexible … So she’s charging 2000.00 in my mortgage for broker fees and charging 1500 extra??? Wth?? Please help me !!! Thanks!!

      1. Hi Jacquelin,

        The broker must be disclosed legally in your paperwork, the easiest place to see this is in your letter of direction, which tells the lawyers where to send the funds for closing ie. Bank, Broker, Lawyer etc.

        Typically, the broker fee is paid and split between the mortgage agent/broker and their company. A deals, and deals with Banks typically don’t charge a lender fee. If your rate is above the 3% mark, it is most likely with a B Lender, whom will charge a moderate lender fee, though at much lower rate than say a private lender.

        Also, fees are always paid on closing. From what you’ve mentioned in your post, it seems like not only is the bank paying her the commission (depending on the lender, rate and length of your term, that’s anywhere between 0.5% to 1.1%), but she’s also asking for a broker fee (these are split with the brokerage), and then asking for a cash/under the table fee extra from you and your husband (likely to make up the cost of her split with her company).

        My suggestion is to perhaps look into another broker. Ask them up front what their costs of service are. As mentioned elsewhere in these comments, brokers will seldom charge broker fee or extra fees period if it’s an A deal. There’s a moderate fee for B Deals, and Privates can range around 2-6% depending on the lender and your broker from what I’ve seen and experienced myself.

        Feel free to give me a call if you have questions. Good luck.

  18. True, most “A” lenders don’t allow brokers to charge a fee. Those that do allow, a broker would have to be crazy to charge their client if the transaction is easy and straight forward. With a finder’s fee of about 1% of the mortgage amount, if I spend an average of two hours on a typical “A” deal, taking into account the time of meeting with the client, organizing the paperwork, coordinating everything with the underwriter, appraiser, lawyer, and even builder and handling the final instructions, on a $300,000 mortgage I’m pulling in about $2,500. That’s about $1,000 an hour, which I think is completely satisfactory for a straight, no problems “A” deal.
    Now, the more complex deals I will obviously charge a lot more simply because of the amount of work involved, especially private funding deals, and also to reflect the fact that some lenders don’t pay a standard finder’s fee. With “B” and private deals, the compensation the broker is paid by the lender is less consistent than lenders who deal with the “A” segment.
    Hopefully this clarifies things.

  19. Is it true a broker can charge a fee if you have bad credit? I was told they have to work harder to get a person with bad credit approved, there fore a fee is charged for the extra work.

  20. Hi Payne,
    Sometimes when a mortgage application requires considerable effort, or when a lender doesn’t pay finder’s fees, brokers must charge a broker fee. That compensates for things like:
    * the broker’s expertise and time in structuring the financing
    * his/her advice on lowering the clients’s borrowing costs
    * negotiating conditions with the lender
    * deal management to ensure the mortgage closes on time
    * guidance and hand holding throughout the process.
    On the majority of brokered mortgages, a lender will pay the broker, in which case no fee is usually charged to the client. That said, it’s quite common for fees to be charged on private financing, secondary financing (second mortgages) and other non-institutional sub-prime lending.

  21. Hello, Lot’s of great questions and comments!
    To clarify, Brokers are allowed to charge fee’s whenever they wish to, as long as the fee is properly disclosed to the client and the client agrees in writing.
    A broker cannot charge a fee without proper documentation, this document is called a letter of direction, without this document the lawyer cannot process the fee and we are required by our governing body FSCO to provide a disclosure document outlining all of the costs associated with the transaction. If your broker does not disclose their fee or charge appropriately, then you may have cause for a complaint against them.
    Having said that, my personal practice is to never charge fees to clients on ‘A’ deals, regardless of the time taken to construct the deal and retain the client, and quite honestly the 2 hour turnaround quoted here previously seems low, most deals are several hours of work by time you factor in the initial calls, meetings, paperwork collection, submission to lender and follow up with underwriters, escalations etc. I think a more realistic number if we were consistently tracking easy deals would be to say 4 hours of total time minimum. Yes we are compensated by the lender on most deals and my firm belief is if you are doing enough business then you don’t need to fee your clients.
    It makes more business sense to not fee, do an excellent job for the client and get a referral down the road, I have practiced this for years and it works very nicely.
    However on ‘B’ deals where excessive amounts of time and effort are logged and keeping in mind most ‘B’ lenders are not paying us full compensation on the deal then yes a Broker Fee is applicable and as stated previously on Commerial or Private Funds as we are not compensated at all for these deals. This is real work we do and no one should be expected to work for free, my clients certainly dont log extra hours at the office for free nor do the lawyers offer free hours, you are charged to the minute of time spent. Perhaps a more thorough breakdown of our time and effort could be provided to clients so that they are aware of the value being provided.
    If you don’t feel like your Broker has your best interest at heart and is not being honest then it’s best to move on before you even start with them.
    Associations for the Mortgage Insustry are CAAMP and IMBA, the members lists here can be good starting places to find a good broker, it’s not guaranteed but if the Broker is taking the time to be a member of industry associations and pay their fee’s it’s likely that they are producing enough business and generating enough revenue to join. Also I found website testemonials are a good indicator as well, a good agent/broker will want to have thier clients feedback posted on their websites. Do a little homework first and then have a meeting with the broker to discuss the possiblilty of fee’s and or cost’s that might be associated with your transaction.

  22. I ‘ve been managing a seven figure
    portfolio of equity private mortgages
    for more than 20 years. No credit,
    poor credit etc. Until recently, mortgage
    brokers have been charging their
    clients a maximum 10% of the loan
    amount. But recently, I’ve put through
    a couple with fees in the 20% range–
    e.g., $5K on a $25K loan. It’s legal but
    I don’t feel comfortable and have decided to
    turn away these deals. Am I wrong?

    1. reason I ask is I have just been offered a 2nd mtg with an 18% fee for a 75% to value..I have 2.1m assets .8 equity but credit report, although 660 score, shows written off debt (not good with A lenders) … I had to do a 350k fire code upgrade 7 years ago used all credit available to me… There must be some good lenders out there

      1. By 18% fee do you mean interest?
        If not, what is the rate?
        If so, then assuming you have no other unpaid debts or recent delinquencies, 18% interest is too high for 75% LTV unless there is a problem with the property.

  23. I don’t know the circumstances but $5K on $25K definitely seems predatory. Most brokers wouldn’t in good conscience charge that kind of fee.

  24. I appreciate the response. And now
    feel queasy that I relented and have
    committed to another private second
    of $54,500 for which the broker is
    charging the client $6,975. His
    explanation is that these are
    co-brokered deals, so the fee is
    split four ways. I don’t pay
    anything to the broker. (You
    haven’t mentioned what your
    relation is to the mortgage

  25. can mortgage brokers in Canada ask for fee if you do not wish to continue with them? I have a situation where broker is asking for 1% fee if I move to different lender if the rate is same as he offered.
    Is it legitimate for charging when your intent if for shopping for best rates/ deals.

  26. They can ask what they want.
    But, in Ontario, until you sign a
    mortgage agreement, the broker
    cannot accept or require you to
    make a payment for any services
    or expenses for a mortgage of
    less than $300,000.

  27. We are dealing with a mortgage broker and have now been told that they have secured a first and second mortgage for our home purchase. When we were given an estimated break down of costs associated with doing this deal we were also informed that there would also be fess for Brokerage and legal (not our legal but the lender’s) to the tune of close to 8,000.00 is that reasonable or are we being taken for a ride simply because we have rough credit and cannot secure financing with an A lender until next year

  28. I was approved for a $230,000 mortgage at 2.94% back in May 2013.
    The building was under construction and was not registered until October 1, 2013.
    My mortgage broker said the rates jumped between May and October and he had to do a lot of work to still get me the 2.94% to close.
    From my understanding, he said that he had to give up his ‘points’ with the lender and had to transfer his commission cost to me ($2,300)… That’s the part that’s not sitting well.
    Throughout this whole process, I’ve always had to stay on top of my broker to get work done. The closing should have been completed in early September but he left it until the last week (My lawyer even had to extend the closing date to October 4). My lawyer feels that there were several ways of getting this deal done without me having to pay the commission – if my broker had not left this to the last minute.
    Does this sound right? I’m not sure if I should be paying this fee.

  29. May to Oct. 1 is more than 120 days. Most rate holds last 120 days or less. You can’t get a rate that no longer exists. Your broker should have charged you the higher rate but not charged you the fees.

  30. We were charged $3,000 Broker’s fee in Windsor, Ontario. When we went to him he clearly stated his fee was small and less than $1,000. He stated that $2000 and something was going o the CMHC. It did not as the bank stated it is included with your mortgage she told us show that document to our lawyer who immediately sent the mortgage broker a letter stating return the money forthwith. He never did so we called the mortgage broker he told us on the phone go to hell and if we take him to court we would be paying all his expenses. The bank told us we didn’t need the mortgage broker and she almost fainted when I told her but we paid him $3,000. Now the mortgage broker is lying to the government. Not only that the website he is using is not his. He called my wife while I was at work and stated he needed a bank draft for $3,000 – she stated why so much? He stated because the $2,000 and something has to go to the CMHC. When we left his office to go to the bank that is when the ban told us to show our lawyer that document. He even asked us to take his cards and stated with the economy it was hard getting clients and to recommend him. No way would we ever do that. He knew what we had left in the bank and he took it.

  31. A broker is arranging a $300,000/- personal mortgage from private lender secured by commercial property owned by that individual.
    Is broker fee 5% legally allowed in Ontario?

  32. we just bought condo for 268,000 broker got us rate for 2.99 and he is charging us 1200 for his services what is he charging us for is my question? I was told that they negotiate for you but is that amount right? we are first time buyers so don’t know much advice please

    1. Hi Kiki,
      If you’re a well qualified borrower getting just a regular mortgage, it’s unusual to be charged a broker fee.
      You should directly ask the broker what the fee is for. Then report back here if you don’t mind.

  33. I used a broker for my Mortage. This is my first time buying a home so there are so many things I don’t know with this process. I recently signed my mortgage papers and realized that included in my Mortage was a brokers fee of $2000.00. I asked her what are these fees and she said ” the lender gives us a PARTof the money”.. And tried to change the topic…. (I don’t know of she means part of the 2000 or the 2000 is part of the mortgage)… From there I’ve been suspicious… Can someone please clarify this for me?? She said the broker fees are charged by the bank… So I’m guessing they will give her the $2000.00…. But here’s why I’m uncomfortable…. She is charging me 1500.00 separately … She told my husband and I that we can make small payments and she’s flexible … So she’s charging 2000.00 in my mortgage for broker fees and charging 1500 extra??? Wth?? Please help me !!! Thanks!!

    1. Who is the lender? If it is a bank or prime lender and you are fully qualified for best rates then there should be no fees. If it an Equitable Bank or B2B Bank on the alternative side then there may be a brokerage fee charged depending on how much the broker is being compensated by the lender.

  34. Thank you Lior, Mortgage Edge for responding!! It is HOME TRUST… I just spoke to my sister who also used a broker and she is with home trust as well…she said the broker didn’t include her fee in the mortgage because my sister asked her not to because she would pay it separately…I’m so worried this lady is going to make me sign documents that I owe her more …

  35. Hi Jacqueline,

    If the mortgage is with Home Trust on the alternative side then fees will apply. There is a lender fee and a brokerage fee. The lender fee is charged by the lender (usually 1% of the mortgage amount) and part of that fee is used to compensate the broker (finder’s fee). Some brokers feel that the finder’s fee is not enough for the work they have done (in certain situations it really isn’t) and will add a separate brokerage fee to make up the difference (probably the 1,500 you said you are being charged separately). Keep in mind that there are no hard rules on how much brokers can charge clients for their work. Every broker is different in terms of what they believe is fair compensation. I hope this clarifies things for you.

  36. I am using a broker to refinance my home . $150,000 mortage on a home that appraised at $435,000.00 the home is clear of any mortage at this time. I am self employed with $100,000 unsecured debt (credit cards and credit line) the broker has got an approval from Home Trust 1 year closed at 4.75% there is a $1,500 acceptance fee to Home Trust, I can live with that, but the broker is charging $7,500 broker fee bringing the total fees to over $10,000 . Any ideas?

    1. Hey Doug,
      A 5% broker fee is excessive, plain and simple.
      A reasonable fee would be 1% unless your deal is unusually complex with few lender options. In that case, maybe 1.5%-2.0% or so might be justifiable.
      At a minimum, I’d get a second opinion through another broker. Your loan-to-value is super-low (35%) so that broker may be able to recommend other more competitive options.
      Good luck,

  37. Hi Doug. $7,500 on a $150,000 1st mortgage is high, even for business for self clients. (BFS) I am a mortgage specialist and over 20 years I have worked with hundreds of clients that are BFS, have tax arrears and bruised credit. Many with all 3. Home Trust is one of my preferred alternative lenders that I have a great working relationship to overcome these challenges. I would be happy to assist you with a mortgage solution with a much lower broker fee. Just let me know if you are interested. Thank you.

  38. The minimum mortgage amount that allows upfront fees to be charged in Ontario was changed by FSCO to $400k last year. I’m seeing some incorrect quotes of $200k and $300k in the comments.

  39. Hi Jacqueline,

    If the mortgage is with Home Trust on the alternative side then fees will apply. There is a lender fee and a brokerage fee. The lender fee is charged by the lender (usually 1% of the mortgage amount) and part of that fee is used to compensate the broker (finder’s fee). Some brokers feel that the finder’s fee is not enough for the work they have done (in certain situations it really isn’t) and will add a separate brokerage fee to make up the difference (probably the 1,500 you said you are being charged separately). Keep in mind that there are no hard rules on how much brokers can charge clients for their work. Every broker is different in terms of what they believe is fair compensation. I hope this clarifies things for you.

    I am not clear how you explain the fees. “The lender fee is charged by the lender (usually 1% of the mortgage amount) and part of that fee is used to compensate the broker (finder’s fee). Does the 1% fee need to be disclosed to the borrower in advance and explained how is distributed? Does the agreement need to be explained in advance, agreed, signed and given a copy to the borrower? What if the broker did not explain to the borrower all the details, the agent did not sign the copy and gave a copy of the charges document to the borrower? What if there is no deal, no transaction? I talked to Home Trust and they said that if there is no advance of funds, then they don’t charge anything the broker….Does the Broker need to collect all of the evidence (proof for income) from the borrower in order to be properly approved for a mortgage? Any on-line application to Home Trust is conditional on evidence provided to them. What if it is not provided? Can the Broker still charges the borrower a fee of 1%?
    Thank you

  40. Hello, came across this website today after searching for mortgage lender fees.

    My wife and I went to sign a mortgage commitment yesterday and found out that the broker is charging $7,000 on a $79,000 private mortgage in Ontario. That is in addition to the $3000 lender’s fee. All the charges at the end came to around $12,000. Immediately, that did not sit well with my wife and I. We are both what is called “non-prime” clients but still about 10% brokerage fees on a consolidation deal? we feel that is too high.

    When repeatedly asked why he is charging so much, he could not give a straight answer except that he would have to work hard in the next couple of weeks to make sure the deal goes through. There has to be some regulations buy FSCO, No?

  41. I had my mortgage refinanced august 2014. I recently found out I was charged a broker fee of 8000. 2 percent of my refinance. As well the mortgage was set up as a cash back mortgage so my interest rate is also higher the 8000 cash back was made payable to the brokerage. My broker is now telling me the lender (which is a credit union) had given instruction stating my interest rate and a 2% broker fee and that is the credit unions standard. Is this standard? I wasn’t advised this thru my broker and I asked for a contract stating the broker fee and she said they don’t do broker contracts. Am I bring taken for a ride?

  42. Broker fees must be disclosed in writing. It’s the law. Tell your broker to prove that you signed something agreeing to the broker fee. If the broker does not respond, complain to the broker regulator in that province.

  43. I bought a house a year ago with a broker, she said that I was approved for 10% Grant with the COAHP program and to go ahead and find a home, after I found a home and started the process I asked about the grant and she said she hadn’t heard anything from them, I contacted them directly and they stated they never received my application for the grant and even if I did they had a long waiting list, I confronted her about it and she said she faxed it in but arranged a cash back mortgage for me without even mentioning it to me, then due to the lawyers availability they moved the closing date and because of that my interest rate went from 2.8% to 3.94% I had already signed most of the papers and would have lost my deposit at minimum, if not sued if I tried to back out,

  44. Hi…
    At the time of closing my lawyer asked me to sign the paper with mortgage broker fee of $4850 and when I declined they said no we have to & I told them that my broker already charged cash &2000 from there any solution to fight with it..,

    1. Did you agree to paying the broker a fee BEFORE you got to the lawyer’s office? If so, how much? Was it in writing?

      You don’t have to sign anything you don’t want to, but if you don’t sign then, right or wrong, they can withhold financing. If the broker or lender withholds financing because they are trying to coerce you into a fee you didn’t agree to, report them to the provincial regulator immediately.

      Here are the regulators contact information –

  45. Help! We refinanced our mortgage and included all out credit debt to form a new mortgage with home trust, we used a broker, I asked him a couple different times how he got paid and he said he got paid internally. Now when we went to the lawyer on the invoice it stated a payment was made to the mortgage broker company for $2000 and then another payment of $3950 to the actual brokers name, the mortgage is 232,00 @2.49% in the contract does it have to state the actual $ amount they are taking for a fee or the percentage they take? Or does it simply have to state that they just have to take a fee, not being specific about it. I searched the contract and I can’t see anywhere where it clearly states there is a fee,

    1. Hi RLJ,

      Disclosure is dependent on both the province of the transaction, and whether the fee was paid directly by the borrower. If the fee was a “brokerage fee” paid by the borrower to the brokerage/agent/broker, this requires clear documentation and disclosure of exact amounts upfront. This would also involve the signing of a ‘letter of direction’ instructing the lawyer to send the fee to the brokerage upon the mortgage’s closing.

      If the fee in question is not a fee that is directly paid by the borrower, e.g. If it is a commission that the lender chooses to pay the brokerage for arranging the mortgage on their behalf, the disclosure requirements vary depending on the province.

      Hope this helps somewhat.

  46. what is a standard fee on a commercial mortgage as I realize the l the broker will not get paid by the lender. I have a broker offering 1.5% on anything over $250,000

    1. I’ve seen commercial fees range from 1% to as high as 3%. The average is probably around 1.5%.

      From a broker’s perspective, the problem with commercial deals is that most don’t close. You have to make hay on the ones that do.

  47. Hi, Is Scotia Bank considered A deal lender? Do they provide brokers finders fee?

    Here’s my situation. I was with a private lender. During my renewal I decided to refinance my mortgage. I contacted the same broker who got me the private deal mortgage 3 years before.

    He suggested that I go with Scotia Bank (my mortgage amount was 300K consolidating all my debts). I said ok, we processed all the paper work with all the documents i provided (Pay stub, work letter, T4’s, Credit report with a credit score of 800) He came back and told me that he needed to negotiate hard with Scotia to this deal and it requires 1% free as my income was less than 65K and he had to tweak the paper work to get me the mortgage. Is this a normal practice?

    I was under the assumption Scotia would have rejected if they had an issue with my income. Am i correct in assuming?


    1. Hey there Brian, Generally speaking, if the bank can do the deal then the broker will get paid, up to or slightly over 1% of the mortgage amount. That’s a fair and standard finder’s fee on a bank deal. Any more than that is just taking advantage of the customer IMO.

      I can promise you there are plenty of brokers who would do that deal all day long for the lender’s normal compensation. Moreover, any reputable broker always discloses all fees up front before the application is submitted to the lender.

      P.S. I’d be very curious to know what “tweak the paperwork” means.

  48. Hi there thank you for the website.

    1. Do Brokers potentially get paid more on a higher interest % Mortgage or for not so great terms by the Lender? It seems difficult to trust some Brokers, that they are actually acting in your best interest?

    2. What do you think of this situation: Person is self employed, perfect credit, made 80K last year. Wants 310K Property, can put 20% down as first-time buyer, has car payment 600 and Credit Line outstanding of 50K with 350/mth payment. I’ve done the math and it comes in under GDS and TDS %. Is this an “A” buyer, or “A” deal, or a “B”?

    3. In regards to 2, the current Broker has said there was a new law passed in regards to Lending rules where on outstanding debts like a Credit Line, 3% of the outstanding balance must be used in the TDS calculation? So instead of the 350/mth ACTUAL payment, this payment has to be calculated into the TDS as 1500/mth. I can’t find any such new ruling on this?

    4. In regards to 3, I DID find new rules, where people paying less than 20% have to use the BOC 5 year fixed rate (currently 4.64%) for the Mortgage amount to calculate the total TDS for qualifying, rather than the actual rate they will pay. Also, “IF” the Lender chooses to put insurance on a 20% or more down payment Mortgage, the exact same rules (all of them) apply now to this mortgage. Question here, do you think a Lender will put this insurance in this example above given parameters set out in 2 above?

    Thank you very much for any help you can provide on this

  49. We have just sought out a 2nd mortgage to take care of outstanding debts and some needed home improvements. Our credit rating is poor, with a couple of accounts in collection and one of us is self-employed and one has a long-standing T4 job. First mortgage of $99000 on a $475000 home. Total other debts of $35,000, seeking mortgage of $75000. Broker has sent us a proposal at 9.99% interest (ouch but we know we have to rebuild our credit) but there are is also $150 nonrefundable inspection fee, $3,750 Broker fee (that’s 5% of the loan) and another $3,750 Lender fee (another 5%) I get that we are certainly not prime and we feel like we might not have a choice but is this typical for our situation? Clearly there is quite a bit of equity in our home.

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