Do Mortgage Brokers Charge a Fee?
Mortgage brokers are licensed professionals who help people get approved for mortgages. They work with a network of lenders to find the best mortgage for their clients. Mortgage brokers in Canada don't usually charge a fee to clients. The lender will normally pay the mortgage broker once the mortgage has been funded. However, if the borrower can't get approved by "A" lenders and needs to seek alternative options, mortgage brokers typically charge a fee for their services. This is because the alternative lenders don't pay the broker for their services. The amount of the fee can vary depending on the broker and the type of mortgage.
How Much Do Mortgage Brokers Charge?
When mortgage brokers do charge a commission, it will be a percentage of the loan amount. The commission rate can vary depending on the broker and the type of mortgage, but it is typically around 1%. For example, if you get a mortgage with a loan amount of $200,000, the mortgage broker would typically charge a commission of $2,000.
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Are There Other Fees?
There aren't normally any other fees associated with a mortgage broker's services. However, there can be other costs associated with getting approved and getting the mortgage funded.
These can include:
Appraisal Costs: They range from $300-$500 (if you have a larger property, this can be even higher)
Legal Expenses: These expenses are a result of setting up the new mortgage. These costs range from $1000-$3000.
Closing Costs: These costs can vary depending on your property type and where the property is located. For example, in Ontario, Canada, whenever a home is bought and sold, there is a land transfer tax. This is normally estimated at 1.5% of the purchase/sale price. For example, for a $500k purchase, the land transfer costs will be approximately $7,500.
Sales taxes: Check with your local province, but you may have sales taxes when you buy a new construction property.
How to Avoid Mortgage Broker Fees
There are a few ways to avoid mortgage broker fees:
Get a Mortgage Directly From a Lender: Some lenders do not charge a fee for their services.
Maintain your credit score: If you have a good credit score, you should be able to get financing with traditional "A" lenders and avoid any broker fees.
Shop Around for a Mortgage Broker: Compare the fees charged by different mortgage brokers before you choose one.
Ask About Discounts: Some mortgage brokers offer discounts for there services and are willing to compromise on the fee.
TL;DR (Too long; didn't read)
Mortgage brokers typically charge a commission, which is a percentage of the loan amount.
The commission rate can vary depending on the broker and the type of mortgage, but it is typically around 1%.
In addition to the commission, a mortgage application might have other fees, such as appraisal costs, legal costs and closing costs.
There are a few ways to avoid mortgage broker fees, such as getting a mortgage directly from a lender, shopping around for a mortgage broker, or asking about discounts.
Questions/Comments?
Give us a shout in the comment section or find our contact details on the main page of our website at www.triedandtruemortgages.ca
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