When making amongst the largest financial commitments of your life, it’s important to understand how mortgage providers – such as your mortgage broker – get paid to ensure your best interests are always front and centre. That’s why we’ve outlined below how mortgage brokers are paid. In most cases, it’s free for you to use a broker, and you benefit greatly by using an expert every time you need a new mortgage or to renew or refinance an existing one.

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Key Takeaways

• Working exclusively with a mortgage broker is typically free for borrowers
• Mortgage brokers are paid a commission (finder’s fee) by the lender once your mortgage funds
• Mortgage broker commissions vary depending on the lender, but typically range between 0.5% and 1.2% of your full mortgage amount

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How do mortgage brokers get paid?

Mortgage brokers are paid a commission (or finder’s fee) by the lender once your mortgage funds. That means it’s always in your mortgage broker’s best interest to keep clients happy throughout the homebuying and mortgage processes, and beyond. 

Mortgage brokers are independent providers who work for you, not the bank or any other lender, and they have access to multiple lenders including banks, credit unions and trust companies. More choice means mortgage brokers are better able to negotiate a mortgage product and mortgage rates that best meets your specific needs.

Mortgage brokers receive deep discounts for borrowers because they do all the work for the lender, as opposed to the lender having to pay a frontline sales staff member’s salary, commissions and benefits. 

How much do mortgage brokers make?

Mortgage brokerage firm or mortgage broker commissions vary depending on the lender, but typically range between 0.5% and 1.2% of your full mortgage loan amount. The exact percentage will also depend on the type of mortgage you choose as well as the length of your mortgage terms. Since this commission is paid directly to the broker by the lender, however, you won’t receive a bill. In many cases, a mortgage broker is also on a split with a brokerage house. This split depends on the broker’s experience as well as what they’ve negotiated with the brokerage. This means the brokerage house takes a cut off the top of the broker’s commission (usually 5-25%).🤓

Example: If your mortgage amount is $600,000 and your broker is paid a 1% commission, they would receive $6,000 (minus any splits they owe to their brokerage)

Most brokers opt for lenders to pay them an upfront commission once the mortgage closes. 

There are two other common commission types that brokers may receive as well:

• Trailer Fees. Offered by select lenders, these are paid to brokers over time – for as long as the borrower stays with that specific lender. This will normally be paid in exchange for a lower upfront commission.
• Renewal Fees. These are paid to the original broker whenever a borrower renews their mortgage with a lender.

Tip: Be sure to work with your mortgage broker again approaching your renewal date in order to compare your current mortgage options as they change over time. This can save you a lot of money.

Average mortgage broker salary

As with any profession, earnings tend to increase based on years of experience and the amount of time dedicated to the profession on an ongoing basis. There are mortgage brokers who earn well above the annual salary of doctors and lawyers. On average, however, mortgage brokers make about $100,000 per year. But, in order to earn this salary in provinces with lower mortgages, such as Atlantic Canada, mortgage brokers have to close more deals than their equivalent in British Columbia, for instance.  

Can mortgage brokers save you money?

Yes. Mortgage brokers receive deep discounts for borrowers because they do all the work for the lender, as opposed to the lender having to pay a frontline sales staff member’s salary, commissions and benefits. Brokers also only get paid by the lender once your mortgage funds. That means it’s always in your mortgage broker’s best interest to keep clients happy throughout the homebuying and mortgage processes, and beyond. 

But, more important than rate, is the fact that mortgage brokers understand the ins and outs of numerous mortgage product lines because that’s what they do daily. They can help save you money throughout your life as a mortgage holder by suggesting accelerated payment cycles and other prepayment strategies that won’t see you put into a ‘no-frills’ mortgage to save money upfront, while risking thousands down the road should you need to break your mortgage early.

A mortgage is a huge financial commitment and it’s important to have the peace of mind that comes along with being able to rely on your provider any time you need a new mortgage or to renew/refinance an existing one.

Tip: There is more involved in saving you money with your mortgage than just the interest rate. Your mortgage broker understands features and payment plans that can save you more money over time than a cheaper upfront rate on its own.

Frequently Asked Questions

Below, we answer some of the commonly asked questions about mortgage brokers in Canada.

Final Thoughts – Bank vs Broker: Which should you choose?

The number one differentiator is that mortgage brokers offer choice. They have access to multiple product lines from a wide variety of lenders – including banks, credit unions and trust companies. In contrast, bank specialists can only offer you a mortgage from their one product line. More choice from brokers means you’ll be matched with the best product and rate catered to your unique financial situation. And if you happen to be self-employed or have credit blemishes, mortgage brokers can still help you, because they have access to specialized lenders as well. 

Your mortgage broker will also get lenders competing for your mortgage again at renewal – or anytime you need to renegotiate your mortgage. It’s your broker’s job to guide you through every step of the homebuying and mortgage processes. And that means staying on top of your ever-changing needs as a homeowner.  

Mortgage brokers must also be licensed and adhere to strict government rules and regulations. And, in order to keep their licence, they’re required to take continuing education and relicensing courses to ensure they’re best able to advise on your ideal mortgage solutions during your application process. Bank mortgage specialists aren’t licensed. They can start working for a bank and begin selling mortgages with zero financial training or experience.

Another key distinction is that mobile specialists are bank employees, whereby mortgage brokers are independent business owners. Mortgage brokers work for you, not a lender which means they don’t have to adhere to quotas that would tempt them to push one product over another because they have a personal stake in the outcome. 

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