Ottawa mortgage brokers are paid a commission from the lender who’s mortgage you proceed with. The commission can vary slightly from lender to lender. It is typically a percentage of the loan amount. It is important to note that most lenders pay approximately the same amount of commission. This removes the incentive for brokers to send a majority of their mortgages to one lender over another.
There are two main ways that a mortgage broker will receive commission:
Trailer commission:
This is a commission that is paid to the broker on an ongoing basis. The mortgage broker may receive commission monthly, annually or with each renewal. Typically with a trailer commission there is also a lump sum that is paid on the advance of the initial loan.
Upfront commission:
This is a one time commission that a broker receives on the closing of the mortgage. This amount is usually a percentage of the loan itself.
There may be times where mortgage brokers charge a fee for their service. Typically with traditional lending there is no fee for a broker’s services. However, with alternative or private lenders the lender and/or mortgage broker may charge a fee. This fee can vary depending on the type of mortgage. A broker should always inform you of any possible fees upfront. Also, you will have to sign and agree to the fee prior to closing. This assures that no hidden fees can be added during the process.
Learn more: Private Mortgage Ottawa
Learn more: How does a mortgage broker get paid?