Hustle & GritWatch us on YouTube
A trailer fee is a smaller, recurring commission that some lenders pay a mortgage brokerage for as long as the mortgage remains funded with that lender, in addition to the upfront finder’s fee paid at closing. It is an ongoing, lower-rate payment rather than a one-time origination commission, and some lender compensation models use one structure or the other, not both.
A trailer model spreads compensation over the life of the mortgage instead of front-loading it at funding. Lenders that use this structure typically pair a lower upfront finder’s fee with the trailer, rather than layering a trailer on top of a full-size upfront fee.
A trailer fee usually stops once the mortgage leaves that lender — through a renewal elsewhere, a refinance, a sale, or a payout — which is one reason brokers track which of their lenders pay trailers when advising a client at renewal time.
Model, not universal: not every lender in the broker channel pays trailer fees; upfront-only compensation is also common, and the specific structure is set lender-by-lender.
Tied to the mortgage staying in place: a trailer fee generally continues only while the mortgage remains funded and in good standing with that lender.
Renewal decisions can be affected: provincial regulators expect a broker’s renewal recommendation to be suitable for the client regardless of which compensation structure the brokerage earns from staying with the existing lender.
Not disclosed to the borrower by default: like other lender-paid commissions, trailer fees are paid by the lender rather than deducted from the client’s mortgage, though general compensation disclosure obligations still apply.
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.