What is a Lender Fee?

WHAT IS A LENDER FEE?

A lender fee is a one-time fee charged by the lender and deducted from the advance of the mortgage. Lender fees are typically a percentage of the principal amount and are negotiated by the lender and the borrower or the borrower’s broker. In the case of private mortgage transactions, the lender fee is deducted from the mortgage advance prior to the mortgage funds being released to the borrower’s solicitor. For example, if the principal amount of the mortgage is $100,000.00 and the lender fee is 2% of the principal amount, there will be a $2,000.00 deduction from the principal amount. This deduction will be laid out on a document called the “statement of advance” which is generally prepared by the lender or the lender’s solicitor. It is important to be aware of all potential lender fees and to budget accordingly when allocating money during the closing of a real estate transaction so there are no surprises when the lender charges their fees.

Contact us if you need legal assistance with a mortgage transaction. Our real estate law team has the experience and knowledge to assist you throughout every step of the transaction.

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.