Hustle & GritWatch us on YouTube
A broker fee is a fee a mortgage broker or brokerage charges the client directly — separate from any commission the lender pays the brokerage — and must be disclosed in writing before the deal closes.
On a standard bank or monoline residential deal, the lender pays the brokerage a commission on funding, so the client typically pays nothing directly to the broker. A broker fee usually shows up in situations that don't generate a normal lender commission — complex B-lender files, private and MIC second mortgages, or deals requiring significant extra work.
Because a broker fee comes straight out of the client's pocket, provincial regulators require it to be disclosed clearly, usually as part of the cost of borrowing disclosure the client signs before funding. It's also distinct from a lender fee, which is charged by the lender rather than the brokerage.
Written disclosure is required: provincial regulators (FSRA, BCFSA, RECA, the AMF, and others) require any fee charged directly to the client to be disclosed in writing, typically inside the cost of borrowing statement.
Most common on private and B-lender files: broker fees are more typical on private lender and complex alternative deals than on standard bank or monoline mortgages, which pay a lender commission instead.
Separate from the lender's fee: a broker fee is charged by the brokerage; a lender fee is charged by the lender — a single deal can carry one, both, or neither.
Usually a percentage of the loan: when charged, a broker fee is commonly expressed as a percentage of the loan amount, agreed to by the client in advance.
A broker arranges a $50,000 private second mortgage and discloses a 2% broker fee:
$50,000 × 2% = $1,000, disclosed in writing to the borrower before the deal closes and paid separately from any lender fee.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
Every term a Canadian mortgage professional needs — defined, sourced, and kept current.
See how Treadstone can scale your brokerage — a free call, no commitment.