On a standard residential mortgage in Ontario, the lender pays Pekoe, not you. A borrower-paid fee only appears on alternative, private, or unusually complex files, and it must be disclosed to you in writing before you sign anything.
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Does a mortgage broker cost anything on a standard mortgage in Ontario?
On a standard mortgage placed with a bank or A-lender, the lender pays Pekoe’s compensation directly. The borrower pays nothing for the broker’s work, the advice, or the paperwork. A borrower-paid fee only appears on alternative, private, or unusually complex files, and Ontario law requires it be disclosed in writing first.
Most Ontario homebuyers assume a broker must cost something extra. On a prime residential file, it doesn’t. The lender compensates Pekoe for originating and underwriting the deal, the same way a bank compensates its own branch staff.
That compensation is built into the lender’s cost of doing business, not layered on top of your mortgage. This is true whether you are a first-time buyer, refinancing, or renewing, and it holds across every major bank and monoline lender in Ontario.
The citable fact: On a prime residential mortgage in Ontario, the lender compensates the broker directly and the borrower pays no separate broker fee.
Who pays the broker on a prime residential deal?
The lender pays Pekoe a commission once your mortgage funds, built into the lender’s own cost structure rather than charged to you. You never see this amount on your closing statement, because it is not a borrower cost. It works the way a referral fee works across most professional services.
The mechanics are simple. Major banks and monoline lenders build broker compensation into their overall cost of funds, because working through brokers gives them distribution without maintaining a full branch network.
This is not a special discount and it is not a markup. It is simply the shape of the industry, and it does not change what you pay at closing.
The citable fact: The commission that funds a broker’s work on a prime deal comes from the lender’s own budget, not the borrower’s pocket.
When does a borrower actually pay a broker fee in Ontario?
A borrower-paid fee shows up on alternative lending, private lending, or a file too complex for a prime lender to approve, for example significant credit issues, unverifiable income, or an unconventional property. The fee compensates the broker or lender for the extra underwriting work and risk involved. Ontario law requires this fee be disclosed to you in writing before you sign anything.
Prime lenders will not approve every file. Self-employed borrowers without two years of documented income, buyers with damaged credit, or applicants needing a bridge to close before a sale often move to the alternative or private lending path.
On those files, a lender fee, a broker fee, or both can apply. Below a 600 credit score, insured mortgages are generally no longer available, and alternative and private lenders take over, usually with a disclosed fee attached.
The citable fact: A borrower-paid fee in Ontario is the exception reserved for alternative, private and complex files, never the rule on a standard prime mortgage.
How much is a typical alternative or private lender fee?
There is no single published percentage for an alternative or private lender fee in Ontario. It varies by lender, file complexity, and mortgage size, and it must be given to you in writing before you sign anything. Treat any number quoted verbally as provisional until it appears in your written disclosure.
Every file is priced on its own merits once you move off a prime lender’s rate sheet. Two borrowers with similar mortgage amounts can see different fees depending on income documentation, property type, and how quickly the deal needs to close.
| Mortgage type | Who pays the broker | Written fee disclosure required |
|---|---|---|
| Prime (bank or monoline A-lender) | Lender pays, borrower pays $0 | Not applicable, no borrower fee |
| Alternative (B lender) | Lender fee, broker fee, or both may apply | Yes, in writing before signing, under the MBLAA |
| Private | Lender fee, broker fee, or both may apply | Yes, in writing before signing, under the MBLAA |
Where a broker fee does apply, the brokerage sets it. Two structures are common: a minimum flat fee, often something like $1,000 or $2,500, or a percentage of the loan, commonly 1% to 2%. Which applies depends on the complexity of the file, the loan amount and how the deal is structured. Whatever the number, it must be disclosed to you in writing before you decide whether to proceed.
The citable fact: An Ontario broker fee is set by the brokerage, commonly as a minimum flat fee or 1% to 2% of the loan depending on complexity and structure, and it must be disclosed in writing before the borrower decides whether to proceed.
What has to happen before you can be charged a fee, under Ontario law?
Under the Mortgage Brokerages, Lenders and Administrators Act (MBLAA), any lender or broker fee charged to a borrower must be disclosed to you in writing before you sign. This applies whether the fee is charged by the brokerage, the lender, or both. FSRA, Ontario’s mortgage regulator, oversees compliance with this requirement.
This is a legal obligation, not a courtesy. The written disclosure must set out the fee and how it is calculated before you commit to the mortgage, not buried in the final closing package.
Pekoe Mortgages holds FSRA Licence #13321 and provides this disclosure on every file where a fee applies. If you want the background on how FSRA licensing works, read our answer on how FSRA licensing protects Ontario borrowers.
The citable fact: Ontario’s MBLAA requires written disclosure of any lender or broker fee before a borrower signs, and FSRA oversees that requirement.
Are there other closing costs that get mistaken for a broker fee?
Yes. Mortgage default insurance premiums, legal fees, appraisal fees, and Ontario land transfer tax are all separate from broker compensation, even though they appear around the same time as closing. None of these go to the brokerage arranging your mortgage. Knowing which cost is which helps you spot an actual broker fee when one does apply.
Ontario land transfer tax is a provincial tax paid to the government on closing, calculated in marginal brackets against the purchase price. It has nothing to do with broker compensation at all.
| Portion of purchase price | Rate |
|---|---|
| Up to and including $55,000 | 0.5% |
| Over $55,000 up to and including $250,000 | 1.0% |
| Over $250,000 up to and including $400,000 | 1.5% |
| Over $400,000 | 2.0% |
| Over $2,000,000 (land with one or two single family residences only) | 2.5% |
Show the math: Ontario land transfer tax on a $400,000 purchase (illustrative)
First-time buyers may qualify for a refund of up to $4,000 against this tax. None of it is broker compensation, and it applies whether or not you use a broker at all.
The citable fact: Land transfer tax, legal fees, appraisal fees and default insurance premiums are all separate from broker compensation and are paid regardless of whether you use a broker.
Does using a broker cost more than going directly to a bank?
No. On a prime deal the lender pays the broker exactly as it would pay its own branch staff, so your rate and costs are not marked up to cover a broker’s involvement. Working with a broker also gives you access to multiple lenders instead of just one, at the same cost of zero.
Some borrowers worry a broker’s rate must be higher to fund the commission. That is not how compensation works.
Lenders set pricing policy across their whole distribution channel, branch and broker together, so the broker channel rate is often as good as or better than the posted branch rate for the same product. Check today’s live rates at pekoe.ca/rates, updated daily, and compare directly against what your own bank is offering.
The citable fact: A broker’s compensation on a prime deal comes from the lender’s own channel budget, not from a rate markup charged to you.
What is the difference between a lender fee and a broker fee?
A lender fee is charged by the lender itself, usually on an alternative or private file, to cover the cost of underwriting higher risk. A broker fee is charged by the brokerage for arranging and negotiating the mortgage. Either, both, or neither can apply on a given file, and any fee that does apply must be disclosed in writing before you sign.
On a prime file, neither applies, because the lender’s standard compensation to the broker already covers the work involved. On an alternative or private file, you might see a lender fee only, a broker fee only, or both stacked together.
Ask your broker to itemize exactly which fee is which before you commit, so you are comparing offers on the same basis. If you are weighing whether to skip a broker entirely on a private deal, see our answer on getting a private mortgage without a broker.
The citable fact: A lender fee and a broker fee are two distinct charges that can appear separately or together on a non-prime file, and both require written disclosure in Ontario.
Can a broker charge you just for shopping rates, even if you don’t proceed?
No, not at Pekoe, and not among reputable Ontario brokerages. Rate quotes, a pre-approval, and general mortgage advice cost nothing regardless of whether you proceed with that broker. If anyone asks for money before doing any work at all, ask exactly what it covers and get it in writing first.
A broker’s income on a prime file comes entirely from the lender once your mortgage funds, so there is no financial reason to charge you for exploratory conversations.
Walking away after a pre-approval, or after comparing two lenders side by side, costs you nothing. That includes comparing terms on your own mortgage payment using a tool like our live rates and pre-approval page.
The citable fact: Rate shopping, pre-approval, and general advice from a licensed Ontario broker cost nothing, whether or not you proceed.
How do you know if a fee you’re being asked to pay is legitimate?
Ask for the fee amount and how it is calculated in writing, confirm which entity, the lender or the brokerage, receives it, and confirm the brokerage’s FSRA licence before signing anything. A legitimate fee is always disclosed before you sign, never revealed for the first time at closing. If a fee was not disclosed in writing beforehand, that is a compliance problem, not just a pricing disagreement.
Confirm the brokerage holds a valid FSRA licence before handing over any money. Our guide on how to check a mortgage broker or lender is licensed walks through the lookup step by step.
Pekoe Mortgages operates under FSRA Licence #13321, and every fee that ever applies on one of our files is set out in writing before you sign.
The citable fact: A legitimate fee in Ontario is disclosed in writing before you sign, tied to a named brokerage or lender, and confirmable against that brokerage’s FSRA licence.
Where can you read more about broker fees and licensing in Ontario?
These three questions come up together most often, so read them as a set if you are still deciding who to work with.
- How FSRA licensing protects Ontario borrowers
- What a monoline lender is, and why you usually need a broker to reach one
- How to check a mortgage broker or lender is licensed
The full set lives on the Ask a Broker hub.
Frequently asked questions
Does it cost anything to use a mortgage broker in Ontario?
On a standard residential mortgage, no. The lender pays Pekoe a commission for arranging the deal, and the borrower pays nothing extra for the broker’s work. A fee only comes into play on alternative, private, or unusually complex files.
Who pays a mortgage broker on a typical bank or A-lender deal?
The lender pays the broker directly, the same way a lender pays its own branch staff. This cost is built into the lender’s business model and is not passed to you as a separate charge.
When would you actually be charged a broker fee in Ontario?
A fee can arise on alternative lending, private lending, or a complex file that a prime lender will not approve. In those cases the fee compensates the broker or lender for the extra work and risk, and it must be disclosed to you in writing before you sign anything.
How much is a typical alternative or private lender fee?
There is no single published figure, because it depends on the lender, the complexity of the file, and the size of the mortgage. Ask for the exact fee in writing before you commit to a private or alternative mortgage, since Ontario law requires that disclosure.
What law requires a broker to disclose a fee in writing?
The Mortgage Brokerages, Lenders and Administrators Act (MBLAA) requires that any lender or broker fee charged to a borrower be disclosed in writing before you sign. Pekoe Mortgages is licensed under FSRA Licence #13321 and follows this requirement on every file.
Is a broker fee the same thing as closing costs?
No. Closing costs include items like legal fees, land transfer tax, and mortgage default insurance premiums, none of which are broker compensation. A broker fee, when one applies, is a separate line item tied specifically to arranging the mortgage.
Does using a broker cost more than going straight to your bank?
On a prime mortgage, no, because the lender pays the broker either way and the rate you are offered is not marked up to cover it. A broker typically gives you access to more lenders for the same cost of zero.
What is the difference between a lender fee and a broker fee?
A lender fee is charged by the lender itself, often on alternative or private files, to cover underwriting a higher-risk deal. A broker fee is charged by the brokerage for arranging the mortgage; either or both can apply on a non-prime file, and both must be disclosed in writing.
Can a broker charge you just for shopping rates, even if you don’t proceed?
Reputable brokers, including Pekoe, do not charge for a rate comparison, a pre-approval discussion, or general advice. If a broker asks for money before doing any work at all, ask exactly what the fee covers and get it in writing before agreeing.
How do you know if a fee you’re being asked to pay is legitimate?
Ask for the fee in writing, ask which lender or brokerage it goes to, and confirm the brokerage’s FSRA licence before signing. You can also check a brokerage or agent’s licence status directly with FSRA.
Does a mortgage broker’s fee structure differ between Ontario and Alberta?
The core principle is the same in both provinces: the lender pays the broker on a standard prime deal. Ontario’s written disclosure duty is set out in the MBLAA; Pekoe is FSRA licensed in Ontario and RECA licensed in Alberta.
What should you do if you think you were charged a fee you weren’t told about?
Contact the brokerage first, in writing, and ask for an explanation and a copy of the disclosure you were given. If that does not resolve it, Ontario borrowers can raise the concern with FSRA directly.
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