How Does a Mortgage Broker Get Paid in Canada?

The Short Answer: The Lender Usually Pays Your Broker

In the vast majority of Canadian mortgage transactions, the borrower pays nothing directly to their mortgage broker. The lender pays the broker a finder's fee — typically between 0.60% and 1.10% of the mortgage amount — when the deal closes.

On a $500,000 mortgage, that is $3,000 to $5,500 paid by the lender to the broker. The borrower pays $0 directly.

This model has been the industry standard in Canada for decades. It works because lenders would otherwise need to maintain large branch networks to originate mortgages. Paying brokers to bring them qualified deals is more efficient.

However, this compensation model creates a potential conflict of interest that every borrower should understand before working with a broker.

Finder's Fees: How Much Lenders Pay Brokers

A finder's fee (also called a referral fee or origination fee) is a one-time payment from the lender to the broker when a mortgage closes. The fee is calculated as a percentage of the mortgage amount.

Typical finder's fee ranges in Canada: • A-lenders (major banks, monoline lenders): 0.60%–1.10% • B-lenders (alternative lenders): 0.50%–1.00% • Private lenders and MICs: varies widely, often higher

The exact fee depends on the lender's rate to the broker, the mortgage type, and the broker's volume agreement with that lender.

Important: finder's fees are paid out of the lender's margin — they are not added to your mortgage balance or your interest rate. The rate you are quoted is the rate you get regardless of what the lender pays the broker behind the scenes.

Volume Bonuses: The Conflict of Interest You Need to Know About

Beyond the finder's fee, many lenders pay volume bonuses to brokerages that send them large amounts of business. This is where potential conflicts of interest arise.

How volume bonuses work: • A lender might pay a standard finder's fee of 0.85%, but if a brokerage sends them more than $20M/year in funded mortgages, they bump the fee to 1.00% on all deals • This means a broker close to a volume threshold has a financial incentive to recommend that specific lender — even if another lender might be slightly better for you • Volume bonuses are paid to the brokerage, not always disclosed per-deal to the borrower

What this means for you: Volume bonuses do not necessarily mean you are getting a bad deal. Most brokers genuinely try to find you the best option. But knowing that these incentives exist helps you ask better questions.

Under Ontario FSRA regulations and most provincial frameworks, brokers are required to act in your best interest and disclose material conflicts of interest. However, the exact disclosure requirements vary by province, and "volume bonuses exist" is not always disclosed deal-by-deal.

Trailer Fees on Variable-Rate Mortgages

Some lenders pay brokers ongoing "trailer fees" as long as the mortgage they arranged stays with that lender. Trailer fees are most common on variable-rate products.

Trailer fees are typically small (0.05%–0.15% per year of the outstanding balance) but create an incentive for brokers to keep you with the same lender at renewal rather than shopping aggressively.

Not all lenders pay trailer fees, and they are more common in the investment industry than in mortgages. If you have a variable-rate mortgage and your broker recommends renewing with the same lender without significant shopping, it is worth asking whether trailer fees apply.

When Brokers Charge Borrower Fees

For most standard (A-lender) mortgages, brokers charge borrowers nothing. But for certain types of deals, brokers may charge a fee to the borrower directly:

• B-lender deals: When the borrower does not qualify with A-lenders and needs an alternative lender, some brokers charge a lender placement fee (typically $500–$1,500 or 0.5%–1.0% of the mortgage) • Private mortgages: Broker fees are common and can be 1%–2% of the mortgage amount (in addition to higher interest rates) • Renewal/switch fee: Some brokers charge for shopping a renewal or switch if the transaction does not close

Any borrower fee must be disclosed in writing in Canada before you sign. Ask your broker upfront: "Will you charge me any fees, and if so, how much and when?"

If a broker tries to charge you a fee on a straightforward A-lender purchase or refinance, that is unusual and worth questioning. The lender's finder's fee should cover the broker's compensation for standard deals.

Disclosure Requirements by Province

Canadian regulations require brokers to disclose their compensation to you. How detailed that disclosure must be varies by province:

Ontario (regulated by FSRA): Brokers must provide a written disclosure of all direct and indirect compensation before a mortgage is arranged. This includes finder's fees and any third-party compensation.

British Columbia (regulated by BCFSA): The BC Mortgage Brokers Act requires written disclosure of all costs and remuneration related to the mortgage.

Alberta (regulated by RECA): Real Estate Council of Alberta regulations require disclosure of all remuneration received in connection with a mortgage.

Quebec (regulated by AMF): The AMF requires clear disclosure of broker compensation, including any compensation paid by the lender.

In practice: ask your broker to show you the disclosure form. It should spell out who is paying them and how much.

Does Broker Compensation Affect Your Rate?

No — your mortgage rate is determined by the lender and should not change based on what the lender pays the broker.

The rate a lender offers through a broker channel is set in advance. A broker cannot "negotiate away" their finder's fee to lower your rate at the same lender. (Some brokers claim to do this — if so, ask for it in writing.)

What CAN affect your rate: • The broker shopping multiple lenders to find the best rate for your scenario • The broker knowing which lenders are running promotions • Rate holds: a broker can lock in a rate for 90–120 days while your purchase completes

The broker's value is not in negotiating with one lender — it is in having access to 30–40+ lenders and knowing which ones will approve your specific deal at the best available rate.

How to Protect Yourself

You do not need to distrust your broker. Most are genuinely trying to find you the best deal. But asking informed questions protects you:

1. Ask: "How many lenders do you have access to, and how many are you comparing for my deal?" 2. Ask: "Are you receiving a volume bonus from the lender you're recommending?" 3. Ask: "What are the top 3 lenders for my situation and how do their rates compare?" 4. Cross-check: use a rate comparison site (Ratehub, RateSpy) to see if the rate you're being offered is in the market range 5. Read the disclosure form your broker provides before signing anything 6. Get the full cost of borrowing in writing — rate, penalties, and any broker fees