WHAT IS A BROKER FEE?
A mortgage broker fee is a one-time fee charged by the mortgage broker for arranging a mortgage. A broker fee is not to be confused with the commission earned by a mortgage broker for processing an institutional mortgage transaction. In industry terms, a mortgage broker fee refers to a fee payable by the borrower to the broker which is usually deducted from the mortgage advance by the lawyer(s) involved in the transaction. There are generally no broker fees payable by the borrower when obtaining a loan from an institutional mortgage.
In the case of institutional mortgages, it is generally the institution that pays the broker a commission for arranging the mortgage. In the case of a private mortgage, the fee is typically a percentage of the principal amount, negotiated by the broker, lender, and borrower. In this scenario, the fee is deducted from the mortgage advance prior to the release of mortgage proceeds to the borrower’s solicitor. Alternatively, the borrower’s solicitor may be asked to pay the fee by way of a letter of direction signed by the borrower(s). The fee is typically included in the statement of advance, which is prepared by the lender or the lender’s solicitor.
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Disclaimer: The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please contact us.
About the Author:
Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here.