What a lender fee actually is
A lender fee is an amount the lender charges for extending a mortgage on wider guidelines than an A lender would use. It is separate from any fee the brokerage itself charges the client, and the two are often confused by borrowers — worth clearly distinguishing both in conversation and on paper before a client feels blindsided by two different charges they didn't expect.
How a fee gets paid
A lender fee is typically either deducted from the funds advanced at closing, or added to the mortgage principal and paid off over the term. Either way, it's part of what the borrower is truly paying for the money, which is exactly why disclosure rules treat it as part of the cost of borrowing rather than a side item that sits outside the numbers a borrower sees.
The Ontario disclosure rule, specifically
Under Ontario's cost-of-borrowing regulation (O.Reg 191/08), a brokerage must give the borrower cost-of-borrowing disclosure — which includes the annual percentage rate the mortgage actually carries once fees are factored in — at the earliest opportunity, and no later than two business days before the mortgage is signed. This obligation applies regardless of which lender tier the mortgage sits in.
Why this rule matters more, not less, at B
Fees make up a bigger share of the total cost at B than at A, which means the disclosure obligation is exactly where a client is most likely to feel surprised if a broker didn't walk them through it early. Get ahead of it — don't let the lawyer's closing documents be the first time a client actually sees the real APR.
What good practice looks like
Put the fee, and its effect on the APR, in writing early and in plain language, well before the client signs a commitment. Not because the regulator demands perfect wording, but because a client who understood the fee in advance doesn't call back upset at closing wondering where a number came from.
