Short answer: on a standard $1,000,000 residential mortgage, the lender typically pays the brokerage a finder's fee of roughly 0.5% to 1.2% of the mortgage amount, about $5,000 to $12,000. That fee comes from the lender, not the client, and it's split between the brokerage and the individual agent according to their arrangement. Here's the full breakdown of how it works.
The Basic Model: Lender-Paid Compensation
For the vast majority of residential mortgages placed through a broker in Canada, compensation follows this structure:
- The lender pays the brokerage a one-time finder's fee (sometimes called a "finder's fee" or "origination fee") when the mortgage funds.
- This fee is typically expressed as a percentage of the mortgage amount, commonly in the 0.5%-1.2% range, varying by lender, mortgage type, and term length.
- Some lenders instead pay a smaller upfront fee plus an ongoing small "trailer fee" for as long as the mortgage stays with them, an incentive for the broker to place clients with lenders who retain them long-term.
- The brokerage then pays the individual agent their share based on their own commission split with the brokerage, this varies by agent experience and arrangement.
Worked Example: A $1,000,000 Mortgage
- Mortgage amount: $1,000,000
- Typical lender finder's fee range: 0.5%-1.2%
- Total fee paid by lender to brokerage: $5,000-$12,000
- Client cost: $0
The exact percentage depends on the specific lender, whether it's a 5-year fixed or variable term, and the lender's own compensation grid, agents don't set this number, lenders do.
Why This Doesn't Cost You Anything
Lenders build this cost into their overall cost of acquiring a mortgage, the same way banks pay their branch staff whether or not that specific client used a broker. Whether a mortgage comes through a broker or a bank's own mortgage specialist, the lender is paying someone to originate the file. The rate you're offered is not inflated to cover the broker's fee, in fact, brokered rates are frequently lower because brokers have access to lender categories not available at retail bank branches.
When Is a Broker Paid Differently?
- Private and alternative lending: Deals with private lenders sometimes involve a broker fee charged to the client, always disclosed in writing before you sign anything.
- Complex commercial deals: Larger or non-standard commercial financing can carry different fee structures.
For a standard residential purchase, refinance, renewal, or investment property mortgage, none of this applies. It's lender-paid, full stop.
Why Transparency Matters Here
Most brokers won't volunteer exactly how their compensation works. We think you should know, because understanding that your broker's incentive is to close a mortgage that works well for you (so you stay a client, refer friends, and come back at renewal) rather than to upsell you on anything, is part of trusting the advice you're getting.
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Questions About Your Specific Situation?
Talk to Sean directly, he'll walk you through exactly how your specific deal is structured, no surprises.