How much does it cost to use a mortgage broker?

Buying your first home, or just thinking about a change, is a huge step. One of the most common questions I get, especially from first-time buyers or people who've only ever used their bank, is "what does it cost to use a mortgage broker?" Or, “how do mortgage brokers get paid?” These are important questions, and I want to clear things up.

How does a mortgage broker get paid?

So, here's the good news: in the vast majority of cases, you, the client, won't pay me a thing. That's right – no fees, no extra charges. How does that work? Well, it's similar to how real estate agents are compensated. When you buy a house, the seller pays the agent's commission, not you. With mortgage brokers, it's the lender – the bank or credit union that ultimately provides your mortgage – that pays me a fee. They compensate me for bringing them your business.

I act as a matchmaker between you and the lender. I do the research, compare all the different mortgage products out there, and find the one that's the best fit for your needs. And for that service, the lender pays me a commission. So, you get all the benefits of having a mortgage expert on your side, without any extra cost to you.

Now, it's important to be transparent. There are some situations where a broker might need to charge a fee directly to the client. This usually happens when the circumstances of the loan require special financing, often from what we call “alternative lenders” also known as B or private lenders. These lenders specialize in situations that traditional banks might not handle, like if you're self-employed with a more complex income picture, or if the property you're purchasing has unique characteristics that make it difficult to finance through conventional channels. These types of loans often involve more work and a different fee structure. When situations fall into these category, I am always open about it from the start. We'll discuss any potential fees upfront, so there are no surprises down the road. But for most people buying a typical home with standard financing needs, you can expect my services to be completely free of charge to you.

Will a mortgage broker do what's right for me?

One of the most important things to consider when choosing a mortgage broker is trust. You need to know that the person helping you with this huge financial decision has your best interests at heart. It's a valid question to ask.

Different lenders offer different commission rates to brokers. That's just a fact of the business. However, I, like all licensed mortgage brokers, have a legal and ethical obligation to act in your best interest. This means I'm required to prioritize finding the mortgage that's right for you, not the one that pays me the highest commission.

Reputation is everything. I build my business on referrals and repeat clients, and that only happens if I provide honest, trustworthy advice. It wouldn't make sense for me to steer you towards a mortgage that isn't a good fit just to earn a few extra dollars. We leave no stone un-turned in an effort to fine you the very best mortgage for your needs. We want to earn your trust, be thrilled with the service you receive, use us for life, and be excited to refer us to people in your circle.

Any commission that is earned on your mortgage file will be disclosed to you. That way, you have all the information you need to make an informed decision. You deserve to know how I'm being compensated, and I'm happy to be completely open about it. My goal is to help you find the perfect mortgage, and that starts with trust and transparency.

Great, so getting a mortgage is free then?

Not quite. Understanding the costs involved in the mortgage process is crucial for any homebuyer. There are some necessary costs of securing a mortgage whether you go through a broker or directly to a bank.

One common expense is the appraisal fee. Lenders typically require an independent appraisal of the property to ensure its value aligns with the mortgage amount. This protects both you and the lender. The cost of the appraisal is usually paid by you, the borrower.

Closing costs are another significant expense. These encompass a variety of fees associated with finalizing the mortgage transaction and transferring ownership of the property. They can include legal fees for the lawyer handling the closing, title insurance to protect against any defects in the property's title, land transfer taxes (which vary by province), and other administrative fees. It's a good idea to get an estimate of closing costs early in the process so you're not caught off guard.

Depending on the specific mortgage and lender, there might be other fees as well. These could include things like application fees (though these are often waived, especially when working with a broker), mortgage default insurance premiums (if your down payment is less than 20%), and discharge fees if you break your current mortgage before the end of its term.

It's important to ask your mortgage broker for a detailed breakdown of all expected costs. We can help you anticipate these expenses and factor them into your overall budget.

Is it worth it to use a mortgage broker?

So, there you have it – a clear picture of what to expect cost-wise when working with a mortgage broker versus a bank. Remember, while some costs like appraisals and legal fees are unavoidable, the big difference often comes down a mortgage broker’s ability to place you in the right mortgage for your needs. In most cases, you won't pay us anything directly – the lender covers that. This allows you to access our expertise, our wide network of lenders, and our advocacy without adding extra expense to your mortgage. We're here to help you navigate this process smoothly and confidently, so please don't hesitate to reach out with any questions you may have. We're ready to help you find the perfect mortgage solution for your needs.