When you’re buying a home in Ottawa or refinancing an existing mortgage, working with a professional Ottawa mortgage broker can save you valuable time, reduce stress, and even help you secure better loan terms. One of the most common questions homeowners and buyers ask is, “How does a mortgage broker get paid?” Understanding how mortgage brokers earn their income is essential for making informed financial decisions and ensuring complete transparency throughout your mortgage journey.
At Bank Street Mortgage, Ottawa’s trusted mortgage brokerage, we believe in providing clear, honest, and comprehensive guidance. Our goal is to ensure that every client fully understands each step of the mortgage process including how we are compensated so you can move forward with confidence, knowing your best interests are always our top priority.
A mortgage broker acts as an expert intermediary between you (the borrower) and multiple lenders. Instead of visiting several banks, a broker researches and negotiates with trusted lenders on your behalf to find the best mortgage rates, terms, and products tailored to your financial goals.
At Bank Street Mortgage, our licensed brokers are regulated by Canadian financial authorities and focus on simplifying the complex mortgage process — saving you time, stress, and money.
Mortgage brokers are compensated in two main ways: through borrower-paid compensation or lender-paid compensation. Let’s break down both structures to understand how they work and how they affect your loan.
In a borrower-paid arrangement, the borrower pays the broker directly for their services. This fee is usually a percentage of the total loan amount, typically ranging from 0.5% to 2.75% of the loan principal. For instance, if you secure a $400,000 mortgage and your broker charges a 1% fee, you would pay $4,000.
This compensation is often paid at closing and can be financed into the loan or paid upfront. Borrower-paid models allow for greater transparency, as the borrower knows exactly what the broker earns and how it’s calculated.
Advantages of Borrower-Paid Compensation:
In a lender-paid structure, the lender compensates the broker after the loan closes. The borrower does not pay the broker directly. Instead, the lender pays the broker a commission, typically based on the loan amount and sometimes the interest rate. This payment usually ranges between 0.5% and 2.75% of the total loan.
However, while the borrower doesn’t pay this fee directly, it’s essential to understand that lender-paid compensation may slightly impact the loan rate or terms since lenders factor in their costs when determining rates.
Advantages of Lender-Paid Compensation:
Generally, reputable mortgage brokers do not charge upfront fees before processing your loan application. Most of their compensation comes from the successful closing of a mortgage. However, some brokers may charge an application or processing fee usually disclosed early in the process and often credited toward the total commission at closing.
Before signing any agreement, ensure you review the Loan Estimate (LE) document, which outlines all costs, including broker compensation, lender fees, and third-party charges.
Yes, mortgage broker fees are often negotiable. While federal regulations cap how much a broker can earn per transaction, borrowers can still discuss compensation options. For example, a broker may agree to reduce their percentage in exchange for a higher volume of business or a simpler loan process.
At Bank Street Mortgage, we encourage open and honest conversations about compensation, ensuring our clients feel confident that they’re receiving fair value for our services.
While the payment structure varies, the cost is typically built into the overall loan — meaning the borrower ultimately pays the broker, whether directly or indirectly. Even in lender-paid scenarios, the lender accounts for broker compensation when pricing the loan, which can subtly affect the interest rate offered.
That said, working with a mortgage broker can still save borrowers money overall. By comparing multiple lenders and securing better terms, brokers often find deals that offset their commission several times over.
| Feature | Mortgage Broker | Bank Loan Officer |
|---|---|---|
| Access to lenders | Dozens of lenders across Canada | One institution only |
| Compensation | Paid via borrower or lender | Salary + bank commissions |
| Focus | Client’s best interest | Bank’s sales targets |
| Flexibility | Multiple loan types and rates | Limited to internal products |
Working with an independent Ottawa mortgage broker gives you more freedom, better options, and unbiased guidance.brokers to prioritize the borrower’s needs rather than the bank’s sales targets.
The Dodd-Frank Act and Canadian financial regulations ensure mortgage brokers follow fair, ethical, and transparent pay structures. Brokers cannot be paid based on loan terms like higher interest rates or prepayment penalties.
They must:
At Bank Street Mortgage Ottawa, compliance and client trust are non-negotiable — we operate under strict professional standards.
Absolutely. Even after factoring in the broker’s compensation, mortgage brokers can often secure lower rates and better terms than borrowers might find independently. Their deep knowledge of the lending landscape allows them to identify niche lenders and programs that align with specific financial goals — such as first-time homebuyer incentives, refinancing opportunities, or low down payment options.
Additionally, brokers handle much of the paperwork and lender communication, saving clients valuable time and reducing stress during one of life’s biggest financial decisions.
At Bank Street Mortgage, we pride ourselves on complete transparency regarding how we are compensated. We ensure our clients fully understand our role, fees, and the benefits of working with a professional broker. Our mission is to help every borrower achieve their homeownership dreams with clarity, confidence, and trust.
We partner with top lenders nationwide to deliver competitive rates, flexible loan options, and personalized service all while maintaining honesty and integrity in every transaction.
Knowing how mortgage brokers get paid empowers you to make smarter financial decisions when purchasing or refinancing a home. Whether the compensation comes from the borrower or lender, the key is working with a transparent, licensed, and experienced mortgage broker who prioritizes your best interests.
At Bank Street Mortgage, we are committed to simplifying the mortgage process and ensuring you understand every detail including how we earn our income. Our success is built on your satisfaction and long-term trust.
