In 2024, nearly half of Canadian homebuyers relied on mortgage brokers to guide them through one of the largest financial commitments of their lives.
Yet very few fully understand who pays mortgage broker fees and how those costs are baked into the deal.
This gap in understanding can lead to surprises at closing, distrust in the process, and missed opportunities to negotiate better terms.
Unexpected fees at closing can add thousands to your out-of-pocket costs, erode the apparent “great rate” you thought you secured, and leave you questioning whether your broker truly had your best interests at heart.
By shining light on when lenders cover fees, when borrowers do, and what hidden charges to watch for, you gain leverage to negotiate, avoid pitfalls, and ensure you pay only what’s fair.
This article will demystify mortgage broker compensation in Canada. You will learn:
Overview of Mortgage Broker Fees
Mortgage advice might feel free, but it’s not. Here’s what you need to know about how mortgage brokers get paid and who covers the cost.
Definition & Components
Mortgage broker fees typically consist of one or more of the following:
Origination fees: Charged for structuring the loan, often expressed as a percentage of the mortgage amount
Application fees: Upfront charges to process your mortgage application, usually $200 to $500
Service or administrative fees: Cover credit checks, file setup, and compliance documentation. These can range from $100 to $600
Fee Structures
Brokers generally charge either:
Flat fees: A set dollar amount, commonly $250 to $1,200 per file
Percentage-based fees: Typically 0.5 percent to 1.2 percent of the loan amount. On a $500,000 mortgage, that’s $2,500 to $6,000
Legal Disclosure Requirements
Provincial regulators mandate clear disclosures of all fees before you sign anything:
Ontario (FSRA) requires a pre-engagement Statement of Interest detailing all compensation arrangements
Québec (AMF) under the Distribution Act obliges brokers to disclose fees, relationships, and commission structures in writing before proposing any loan
BC (BCFSA) and other provinces have similar requirements to protect consumers
Who Pays Mortgage Broker Fees
In Canada, the lender typically pays mortgage broker fees by including a commission in your loan closing. This means you, as the borrower, don’t pay out of pocket, although the cost is built into your mortgage rate.
In some cases, you may pay your broker directly, for example, when using a borrower-paid model or for extra services. Always ask up front which model applies.
Lender-Paid vs. Borrower-Paid Models
Not all broker fees come out of your pocket. Learn the difference between lender-paid and borrower-paid models and why it matters to you.
Lender-Paid Commissions
Mechanics: The lender builds the broker’s commission into its funding cost and pays it upon closing. You see this as part of your interest rate.
Pros for Borrower: No upfront cash required; broker incentives align with getting your loan approved
Cons: The broker’s compensation may be hidden in a slightly higher rate; you don’t see the line-item commission
When It Happens
Standard for high-ratio insured mortgages (e.g., CMHC, Genworth) and most conventional deals
Borrower-Paid Fees
Mechanics: You pay the broker directly at closing or roll the fee into your mortgage principal.
Pros: Potentially negotiate a lower interest rate if the lender’s commission expense is reduced
Cons: You need cash at closing, or you’ll pay interest on fees rolled into your mortgage
Common Scenarios
Private or alternative lenders often require borrower-paid fees
Self-employed or non-resident borrowers with complex income profiles
Advisory engagements or large commercial mortgages where lender structures differ
Hidden Cost Allocation
Some broker fees are easy to spot while others are built into the loan. Here’s how to spot hidden costs and understand who really pays.
Imputed Costs in Interest Rates
Lenders recoup broker commissions by marking up the rate spread. A broker’s 0.25 percent commission may translate into a 0.15 percent higher rate for you.
Advertised vs. Net Rates
An advertised rate of 4.50 percent might actually be 4.65 percent after factoring in a 0.25 percent broker commission. These costs are rarely disclosed in marketing materials.
Cost-Shifting Examples
| Scenario | Advertised Rate | Broker Commission | Net Rate to Borrower | Who Pays |
| High-ratio insured mortgage | 4.50 percent | 0 percent | 4.50 percent | Lender |
| Conventional with lender commission | 4.50 percent | 0.25 percent | 4.65 percent | Borrower via rate |
| Private lender, borrower paid | 4.20 percent | $3,000 flat | 4.20 percent + fee | Borrower upfront |
Regulatory & Disclosure Framework
Clear rules exist to protect you when working with a mortgage broker. Here’s how regulations and disclosures help keep the process transparent.
Federal & Provincial Rules
Bank Act and OSFI govern compensation practices for federally regulated lenders, requiring transparent commission reporting
FSRA (Ontario) and AMF (Québec) enforce pre-engagement disclosures, conflict-of-interest statements, and ongoing reporting
BCFSA and other provincial bodies mirror these protections
Disclosure Forms & Timing
Statement of Interest (SOI) must be delivered before any advice or application
Renewal and Refinance: Brokers must re-disclose fees on renewals and refinances, even if you stay with the same lender
Consumer Protections
Right to full fee disclosure in writing
Cancellation and refund policies vary, but FSRA mandates clear refund terms if a deal falls through
Stakeholder Perspectives
Lenders, brokers and buyers all see fees differently. Understanding each perspective can help you make smarter decisions.
Borrower
Transparent fee structures empower you to negotiate and compare all-in costs rather than focus on headline rates alone.
Lender
Brokers offer cost-effective customer acquisition. Lenders balance commission payouts against volume and yield considerations.
Broker
Sustainable commission models require balancing lender incentives with robust client advocacy. Ethical brokers will lay out both lender-paid and borrower-paid options so clients choose what’s best.
Real-World Scenarios
Wondering how mortgage broker fees play out in real life? These real-world examples show what to expect and what to watch for.
| Scenario | Fee Model | Who Pays | Impact on Borrower |
| First-time buyer, insured mortgage | Lender-paid | Lender | No upfront cost; standard insured rate |
| Commercial mortgage, non-prime lender | Borrower-paid | Borrower | $3,000 fee at closing; lower interest rate possible |
| HELOC refinance for business use | Borrower-paid | Borrower | Fees rolled into principal; interest paid on fees |
Impact on Mortgage Shopping
Broker fees can shape the deals you’re offered. Here’s how they affect your mortgage choices and overall savings.
Rate Comparison Pitfalls
Focusing solely on advertised rates can mislead if one lender’s 4.25 percent hides a 0.30 percent commission while another’s 4.40 percent is truly all-in.
Tools & Calculators
Use all-in cost calculators to input fees, rate markups, and compare net cost over time.
Negotiation Tips
Ask lenders and brokers for the net rate after commission
Request fee waivers or reductions, especially in borrower-paid scenarios
Tax Implications
Broker fees may have tax consequences you didn’t expect. Here’s how they could impact your return and what you need to know.
Investment Property Mortgages
Borrower-paid arrangement fees are generally tax-deductible against rental income.
Primary Residence
Fees on your principal residence are non-deductible personal expenses.
Record-Keeping
Keep invoices labeled “mortgage arrangement fee” and worksheets allocating fees for mixed-use properties.
Trends & Future Outlook
Mortgage broker fees are evolving. Here’s what trends are shaping the future and how they could affect your next mortgage.
Shift Toward Flat Fees
Growing consumer demand for transparency is driving brokers to offer flat-fee models instead of hiding costs in rate spreads.
Regulatory Proposals
Some provinces are considering caps on commission spreads to limit rate markups. FSRA and AMF may release new consultation papers in 2025.
Digital Broker Platforms
Online subscription and flat-fee mortgage platforms are emerging. These platforms offer fully transparent all-in pricing.
Conclusion
Now that you know the ins and outs of mortgage broker fees, you’re better equipped to make informed choices and avoid surprises. Lenders typically cover broker fees in their cost structure, but in specialized or private lending scenarios, borrowers pay directly.
Understanding who pays what and how those fees are allocated can save you thousands and give you the confidence to negotiate.
Next Steps
Always obtain a written fee disclosure before committing. Use all-in cost calculators, compare net rates, and consult a qualified mortgage expert to ensure you get the best possible deal.
Have questions? Get in touch with our mortgage experts or schedule a free consultation by calling (+1 844 354 3033).
Frequently Asked Questions
Can I negotiate broker fees?
Yes, especially when fees are borrower-paid. Brokers may reduce flat fees or agree to rebate part of their commission.
Does lender-paid commission always raise my rate?
Often slightly, but competition among lenders caps the markup. You may see net-to-borrower rates very close to advertised rates.
Are there fees on renewals or transfers?
Yes. Brokers must disclose any renewal or transfer fees in writing. Lender policies vary, so ask for details.
Additional Resources
Financial Services Regulatory Authority of Ontario (FSRA)
Canada Mortgage and Housing Corporation (CMHC) Mortgage Shopping Guide
Consumer Protection BC: Mortgage Broker Disclosure Requirements
