By Hami Tahm · Published September 2026 · Updated September 2026 · 8 min read
How Mortgage Brokers Get Paid in Canada
How do mortgage brokers get paid in Canada, and does it cost the borrower anything?
On the large majority of standard residential mortgages — purchases, refinances, and renewals through a prime 'A' lender — the lender pays the broker a one-time finder's fee, typically 0.5% to 1.2% of the mortgage amount, out of the lender's own margin. It costs the borrower nothing directly. The main exception is private and alternative lending, where the lender usually pays no commission, so the broker charges the borrower a fee directly, typically 1–3% of the loan amount. Brokers are licensed provincially and required by their provincial regulator — FSRA in Ontario, for example — to disclose, in writing before you sign, exactly who is paying them and how much.
Key Takeaways
- On a standard prime mortgage, the lender pays the broker's commission (0.5%–1.2% of the mortgage amount) — using a broker typically costs the borrower nothing directly.
- On private and most alternative lending, the lender pays little or no commission, so the broker charges the borrower directly, usually 1–3% of the loan amount.
- Going straight to a bank instead of a broker doesn't save you the commission — it just removes the broker's ability to shop multiple lenders on your behalf.
- Written disclosure of who pays the broker and how much is a legal requirement, not optional — ask for it before signing if it hasn't been provided.
- A broker's compensation can vary slightly by lender and product, which is a reasonable thing to ask about directly if you want to understand a specific recommendation.
Considering a private mortgage instead?
Broker compensation works differently on private deals — see our guide to private mortgage lenders in Canada for how those fees stack on top of the lender's own rate and charges.
This page is for informational purposes only and does not constitute financial advice. Broker compensation structures vary by brokerage, lender, and province — confirm the specific arrangement in writing with your own broker before proceeding.
The Lender-Paid Finder's Fee (Standard Mortgages)
On a standard residential purchase, refinance, or renewal through a prime "A" lender, the broker is paid a one-time finder's fee by the lender once your mortgage funds — not by you. This commission comes out of the lender's own margin on the loan, the same way a car dealership's finance arm compensates a broker who brings them a customer. The exact percentage depends on the lender's own compensation grid, the size of the mortgage, and sometimes the term length; a 5-year fixed mortgage often pays the broker a somewhat higher commission than a variable-rate product does.
One detail that's easy to miss: the lender pays this commission to the brokerage your broker works under, not to the individual broker directly. What the broker who helped you actually takes home from that commission — a split, a salary, a desk fee arrangement, or some combination — is set by their agreement with their brokerage, not by the lender or by anything disclosed to you. It doesn't change the cost to you, but it's why two brokers at different brokerages can be paid quite differently for arranging an identical mortgage.
| Mortgage Type | Who Pays the Broker | Typical Range |
|---|---|---|
| Prime ('A' lender) purchase, refinance, or renewal | The lender | 0.5% – 1.2% of the mortgage amount |
| Alternative / 'B' lender mortgage | Usually the lender, sometimes a smaller borrower-paid fee too | Lender commission plus, in some cases, a disclosed borrower fee |
| Private mortgage (individual lender or MIC) | The borrower, directly | 1% – 3% of the loan amount |
| Complex commercial or specialized file | Often the borrower, or split | Negotiated, disclosed in writing |
Why Using a Broker Doesn't Cost You Extra on a Standard Mortgage
A common assumption is that going directly to a bank avoids a "middleman fee" a broker would otherwise add. That's not quite how it works: when a broker is involved, their commission comes out of the lender's own margin, not on top of what you pay — so using a broker isn't adding a fee the bank wouldn't otherwise keep for itself. Going direct removes the broker's commission from the transaction entirely, but that doesn't automatically mean the bank passes the saved margin to you as a lower rate — banks set their own rates regardless of how you arrived at them. What going direct definitely removes is the broker's ability to compare that bank's rate against several other lenders at once. The practical trade-off isn't guaranteed price; it's whether you want to shop multiple lenders through one relationship, or negotiate with each bank yourself.
Private and Alternative Lending: Borrower-Paid Fees
The compensation model flips on private mortgages and much alternative ("B" lender) financing. Individual private lenders and Mortgage Investment Corporations (MICs) typically pay little or no commission to the broker who arranges the deal, so the broker's work is instead compensated by a fee charged directly to the borrower — commonly 1% to 3% of the loan amount, disclosed and deducted from the funds advanced at closing. This is one of the reasons private mortgages carry a materially higher all-in cost than a standard bank mortgage even before accounting for the higher interest rate itself — see our private mortgage lender guide for the full cost breakdown.
Disclosure Rules: What a Broker Must Tell You
Mortgage brokers in Canada are licensed and regulated provincially, not by a single national regulator — by FSRA in Ontario, for example, with an equivalent regulator in every other province. In Ontario, FSRA requires brokerages to disclose compensation, fees, relationships, and potential conflicts of interest in writing before you sign. This disclosure isn't a courtesy; it's a regulatory requirement, and it applies whether the payer is the lender (the standard arrangement) or you directly (common on private and some alternative deals). The specific disclosure form and requirements vary by province — if you haven't seen this in writing, ask your broker for it and confirm the rule with their provincial regulator.
A reasonable question to ask any broker
"Which lenders did you compare for my file, what does each pay you, and why is this the one you're recommending?" A broker working in your interest should have a substantive answer beyond simply naming the commission — the suitability of the product for your situation is the actual test, not just the disclosure itself.
Broker vs. a Bank's Own Mortgage Specialist
A bank's in-house mortgage specialist is typically a salaried or salary-plus-incentive employee of that one bank and can only offer that bank's own products and rates. An independent mortgage broker works with multiple lenders and — on a standard prime mortgage — is paid through the same lender-paid commission model no matter which lender you end up with, even though the exact percentage varies by that lender's own compensation grid. Because the broker isn't tied to a single institution's product line, they can genuinely shop your file across lenders rather than default to one bank's offer. Neither structure is inherently better for every borrower; the practical question is whether you want one lender's products or a comparison across several, since the direct cost to you is usually nothing either way on a standard file.
If you're a broker or brokerage evaluating tools to put in front of clients — qualification, stress test, renewal comparisons — see our white-label calculators for mortgage brokers.
▶ Run the numbers a broker would show you
- Mortgage Qualifier CalculatorSee what you'd likely qualify for before you talk to a broker or bank.
- Mortgage Renewal & Refinance CalculatorCompare staying with your current lender against switching at renewal.
Frequently Asked Questions
This page is for informational purposes only and does not constitute financial advice. Broker compensation structures vary by brokerage, lender, and province — confirm the specific arrangement in writing with your own broker before proceeding.
Sources
- Financial Consumer Agency of Canada — Working with a Mortgage Broker
- FSRA (Ontario) — Mortgage Brokerage Disclosure Requirements
▶ Related guides
- Private Mortgage Lenders in CanadaHow broker and lender fees stack differently on private mortgages.
- How to Qualify for a Mortgage in CanadaCredit score, GDS/TDS ratios, and the stress test any lender or broker will use.