What fees do alternative lenders and mortgage brokers charge?

In Ontario, a broker is usually free to you on a bank, credit union or monoline mortgage, because the lender pays the brokerage. Alternative and private mortgages may carry a lender fee, a broker fee, or both. Every fee must be disclosed to you in writing before you commit.

How brokers are paid on institutional mortgages

When we arrange a mortgage with a bank, credit union or monoline lender, the lender pays the brokerage when the mortgage closes. You do not pay us separately for that work.

Stonefield Mortgage is a trade name of Stonefield Capital Inc., FSRA mortgage brokerage licence #13722. Like every Ontario brokerage, we must tell you in writing how we are paid and about any fee before you commit.

It is fair to ask any broker how they are paid on your mortgage and whether that payment varies by lender. A good broker gives a plain answer.

Fees on alternative and private mortgages

An alternative lender, sometimes called a B lender, is a regulated lender, often a trust company, that accepts borrowers a bank may decline. An alternative lender's mortgages usually cost more than a bank's. The extra cost can come in more than one form:

A higher rate than an institutional mortgage.
A lender fee, charged by the lender for setting up the mortgage, often deducted from the advance.
A broker fee, in some cases, for the extra work of arranging a non-standard mortgage.

Each of these costs is set out in writing before you commit. Alternative-lender fees vary with the size of the mortgage, the risk and the term, so we do not quote amounts here. We show you the fees for your situation.

Private mortgages, from individuals or funds lending their own money, cost more again. A private mortgage commonly carries lender and broker fees, legal costs on both sides, and sometimes an appraisal. Private terms are usually short, so if you renew, there may be fees again.

The fees and the short terms are why private money suits only a short bridge with a clear plan to repay it.

Other costs to compare

Whatever lender you use, look at the full cost, not just the rate:

Legal fees to register the mortgage, and sometimes the lender's own legal costs.
Appraisal costs.
Prepayment terms, which can be stricter on alternative and private mortgages.
Renewal fees, if the lender charges one at the end of a short term.

Add the fees to the interest over the term to compare offers on an equal footing. A lower rate with a large fee can cost more than a slightly higher rate with none.

How to protect yourself from unexpected fees

Ask for every fee in writing before you sign anything.
Ask whether a fee is refundable if the mortgage does not close.
Never pay a fee in cash or before you have the written disclosure.
Check the brokerage's licence with FSRA.

What to do next

If you have been quoted fees and want a second look, use our call-me-back form. You can also compare two offers side by side with the compare offers tool.

Common follow-up questions

Do I pay a broker fee on a bank mortgage?

Usually not. For most bank, credit union and monoline mortgages, the lender pays the brokerage. Any fee would be disclosed to you in writing first.

Why do alternative lenders charge fees?

Because alternative-lender loans carry more risk and take more work to set up. The fee is part of how an alternative lender prices that risk. Compare the total cost, including fees, against your other options.

Can fees be added to the mortgage?

Often the fees come out of the mortgage instead: lender fees on alternative and private mortgages are often deducted from the amount advanced. Ask how each fee is paid so you know how much you will receive.