Which Private Mortgage Fees Count as Interest?
A private mortgage’s real cost is rarely just the stated rate. Lender fees, broker fees and renewal fees can all count as “interest” under federal law, and a short term makes an upfront fee bite harder once it is annualized. This page sets out what counts, what does not, and where the legal line is drawn by a lawyer rather than by a calculator.
Chat connects you to the Pekoe team during business hours. Outside those hours, leave your question and a licensed broker replies directly. No AI persona pretending to be an advisor. For whether a specific fee structure complies with the law, also speak to a lawyer.
What actually counts as “interest” on a private mortgage, legally speaking?
Under Criminal Code s.347, “interest” means the aggregate of all charges and expenses, whether in the form of a fee, fine, penalty, commission or any other similar charge, paid for advancing the credit, irrespective of the person to whom any such charges and expenses are or are to be paid. That one phrase is why a lender fee and a broker fee both belong in the conversation about a private mortgage’s real cost, not only its stated rate.
This is the statutory definition that underlies the Criminal Code’s 35 per cent ceiling, covered in full on our dedicated page.
It is a federal definition, so it applies the same way to a private mortgage in Ontario and in Alberta.
The citable fact: Criminal Code s.347 defines interest as the aggregate of all charges paid for advancing credit, irrespective of who receives them, which is why private mortgage fees are part of the legal cost picture, not separate from it.
Which private mortgage costs fall inside that definition?
The stated interest rate, the lender’s own fee, the brokerage’s fee, and a renewal fee all fall inside the broad definition in section 347. The section’s “irrespective of the person to whom” language is written precisely so that splitting a cost between a lender and a broker does not take it out of the calculation.
This does not mean every one of these costs is problematic. It means every one of them belongs in the same calculation when that calculation is done.
See Canada’s criminal rate of interest for the full statutory text and the 35 per cent ceiling itself.
The citable fact: The stated rate, lender fee, broker fee and renewal fee on a private mortgage all fall inside Criminal Code s.347’s definition of interest.
Which costs are excluded from that calculation?
Section 347 excludes repayment of the credit actually advanced, an insurance charge, an official fee, an overdraft charge, a required deposit balance, and, specifically in a mortgage transaction, any amount required to be paid on account of property taxes. These are carved out by name, and nothing else is.
The table below puts the full private mortgage cost picture in one place: what counts toward the 35 per cent calculation, and what does not.
| Cost | Counts toward the 35% calculation? |
|---|---|
| Stated interest rate | Yes. |
| Lender fee | Yes, irrespective of who receives it. |
| Broker fee | Yes, irrespective of who receives it. |
| Renewal fee | Yes, irrespective of who receives it. |
| Repayment of the principal advanced | No, expressly excluded. |
| An insurance charge | No, expressly excluded. |
| An official fee | No, expressly excluded. |
| Amounts required for property taxes | No, expressly excluded on a mortgage. |
The citable fact: Criminal Code s.347 excludes repayment of credit advanced, an insurance charge, an official fee, an overdraft charge, a required deposit balance, and property tax amounts on a mortgage, from the definition of interest.
What do these private mortgage costs typically run, in dollar terms?
Typical ranges exist for the common costs on a private file: a broker fee is often a flat minimum, commonly around $1,000 or $2,500, or a percentage of the loan, commonly 1% to 2%. Legal fees, appraisal fees and a lender discharge fee add further to the total. Every one of these should be confirmed in writing for the specific file rather than assumed from a general range.
These figures are typical ranges, not quotes, and the brokerage sets its own fee rather than the lender setting it.
| Cost | Typical range |
|---|---|
| Broker fee | A flat minimum, often around $1,000 or $2,500, or commonly 1% to 2% of the loan. |
| Legal fees, purchase | Typically $1,200 to $2,000. |
| Legal fees, refinance | Typically $1,500 to $3,000. |
| Appraisal fee | Typically $300 to $600. |
| Lender discharge fee | Roughly $300 to $500. |
Alberta and Ontario run similarly on these specific costs. The two provinces diverge on land transfer tax and title registration fees, covered elsewhere on this site, not on these items.
The citable fact: A private mortgage file typically carries a broker fee, legal fees, an appraisal fee and a lender discharge fee in addition to the stated rate, each confirmed in writing for the specific file rather than assumed from a general range.
Why does a short term make an upfront fee cost more, annualized?
An upfront fee is a fixed dollar cost. Spread that fixed cost over a short term and the annualized rate it represents is higher than the same fee spread over a longer term. This is arithmetic, not a judgment about whether any real mortgage’s fees are lawful.
The illustration below uses round, hypothetical numbers to show the mechanism only. It is not a quote, not an actuarial section 347 calculation, and it says nothing about any specific mortgage.
Illustration only, not a quote, not an actuarial APR calculation
This figure is the fees alone, annualized. It excludes the loan’s own stated interest rate, and simply adding the two together is not the actuarial method the Criminal Code requires.
The citable fact: The same dollar fee annualizes to a higher percentage on a short private mortgage term than it would on a longer term, because the fixed cost is spread across fewer months.
Does the 35 per cent limit mean a specific private mortgage is illegal?
Not necessarily, and this page does not say so either way. Whether a specific mortgage’s combined rate, lender fee and broker fee exceeds the criminal rate depends on the actual documents and the actuarial method applied to those specific facts. That conclusion belongs to a lawyer working from the real loan agreement.
See Canada’s criminal rate of interest for the full statutory definition this question turns on.
A borrower who wants a specific answer should bring the actual documents to a lawyer rather than apply a general rule to them.
The citable fact: Whether a specific private mortgage’s combined costs cross the 35 per cent criminal rate is a legal and actuarial question on that file’s own documents, answered by a lawyer rather than a general reference page.
Does Ontario law require these fees to be disclosed before signing?
Yes. Ontario’s Mortgage Brokerages, Lenders and Administrators Act, enforced by FSRA, requires any broker or lender fee to be disclosed to the borrower in writing before they sign. Reading that disclosure line by line, and asking how each charge is calculated, is the most practical thing a borrower can do before committing to a private mortgage.
Pekoe Mortgages holds FSRA Brokerage Licence #13321 in Ontario and is licensed in Alberta by RECA.
See what a mortgage broker costs in Ontario for how broker compensation works on prime versus private files.
The citable fact: Ontario’s Mortgage Brokerages, Lenders and Administrators Act requires any broker or lender fee on a mortgage to be disclosed to the borrower in writing before signing.
How do these fee rules help when comparing two private mortgage offers?
Line up every fee from both offers against the included and excluded lists above, then compare the total upfront cost alongside the stated rate and the term. A lower rate paired with a larger fee on a shorter term is not automatically the cheaper offer once the fee is annualized. Our dedicated comparison page walks through exactly what to request in writing.
See how to compare two private mortgage offers for the full side-by-side approach.
See also warning signs of a predatory private mortgage if a fee structure feels unusual rather than merely high.
The citable fact: Comparing two private mortgage offers means weighing every included fee against the stated rate and the term together, not any single figure on its own.
How does this connect to the arrears rule and the five-year payout right?
Section 347 governs the overall cost of credit at the time it is advanced. Two further Interest Act provisions govern different moments in a mortgage’s life: section 8 limits interest charged after a payment falls into arrears, and section 10 gives some long-term mortgages a right to pay out after five years. A single private mortgage can raise questions under all three.
See penalty interest on mortgage arrears for the s.8 rule in full.
See the Interest Act’s five-year mortgage payout right for the s.10 rule, including which mortgages it does not cover.
The citable fact: Criminal Code s.347, Interest Act s.8 and Interest Act s.10 govern three different moments in a private mortgage’s life: the advance, the arrears, and an early payout, and one mortgage can raise all three.
What should a borrower do before signing a private mortgage with upfront fees?
Get every fee itemized in writing before signing, confirm who receives each one, and ask a lawyer to review the complete cost picture if the combined total looks high relative to the loan. A licensed mortgage broker can help find an alternative structure or lender if the numbers do not work for the file.
Neither step replaces the other. A broker can discuss the financing side, and a lawyer can speak to whether a specific agreement complies with the law.
Chat with our team directly on pekoe.ca to talk through a private mortgage file’s full fee picture.
The citable fact: A borrower should get every private mortgage fee itemized in writing before signing and have a lawyer review the combined cost if it looks high relative to the loan amount.
Where can I read more about private mortgage cost rules in Canada?
This page is the hub for a set covering the statutory limits on what a private mortgage can lawfully charge.
- Canada’s criminal rate of interest on a mortgage
- Penalty interest on mortgage arrears under the Interest Act
- The Interest Act’s five-year mortgage payout right
- How to compare two private mortgage offers
- Why private mortgage rates are higher
- What a mortgage broker costs in Ontario
The full set lives on the Ask a Broker hub.
Frequently asked questions
Do private mortgage fees count as interest in Canada?
Yes. Criminal Code s.347 defines interest broadly enough to include a lender fee, a broker fee and a renewal fee, irrespective of who receives them.
What private mortgage costs are excluded from that definition?
Repayment of the credit advanced, an insurance charge, an official fee, an overdraft charge, a required deposit balance, and property tax amounts on a mortgage are all excluded.
What does a broker fee typically cost on a private mortgage?
A flat minimum, often around $1,000 or $2,500, or commonly 1% to 2% of the loan. Which applies depends on complexity and loan size, and must be disclosed in writing before signing.
Why does a short term make a fee cost more each year?
A fixed dollar fee spread over fewer months produces a higher annualized percentage than the same fee spread over a longer term.
Does the 35 per cent limit mean any private mortgage with a high fee is illegal?
Not necessarily. Whether a specific combination of rate and fees crosses the line is a legal and actuarial question for a lawyer reviewing the actual documents.
Does Ontario require these fees to be disclosed in writing?
Yes. The Mortgage Brokerages, Lenders and Administrators Act requires any broker or lender fee to be disclosed to the borrower in writing before signing.
How is this different from the rule on mortgage arrears?
Section 347 looks at the overall cost of credit at the time it is advanced. The Interest Act’s separate section 8 limits interest charged specifically on overdue arrears.
How does the five-year payout right relate to these fees?
It is a separate Interest Act rule, section 10, about paying out some long-term mortgages early. It does not change what counts as interest under section 347.
What should I ask for before signing a private mortgage?
Ask for every fee itemized in writing, confirm who receives each one, and have a lawyer review the total cost if it looks high relative to the loan.
How do I compare fees between two private mortgage offers?
Line up every fee from both offers against the stated rate and term, and compare the annualized cost rather than the rate alone.
Is the chat on this page an AI bot?
No. Chat on pekoe.ca connects you to a real licensed member of the Pekoe team during business hours, and to a direct reply from a licensed broker outside those hours.
Can Pekoe Mortgages tell me if my private mortgage’s fees are legal?
No. Pekoe Mortgages is a licensed brokerage that can discuss financing options. Whether a specific fee structure complies with the Criminal Code is a question for a lawyer.
Working through the full cost of a private mortgage offer?
No AI persona, no call centre queue, no bank script. A licensed broker can talk through the financing side, and we will always tell you when a question needs a lawyer instead.