How do mortgage brokers get paid?

Aditi Gupta, Content Specialist

May 9, 2025

This piece was originally published on August 31, 2020, and was updated on May 9, 2025.

With files from Tim Bennett.

When you’re shopping for a mortgage, working with a mortgage broker can be one of the most effective ways to find a competitive rate and simplify your mortgage process. In fact, the proportion of consumers who used a mortgage broker rose significantly from 43% in 2023 to 48% in 2024, according to Canada Mortgage and Housing Corporation (CMHC). While many people understand the value brokers provide, fewer are clear on how they earn their income. This guide breaks down how mortgage brokers get paid, who pays them, and what you should know as a borrower.

What does a mortgage broker do?

Mortgage brokers are licensed professionals who act as intermediaries between borrowers and lenders. Unlike banks, which only offer their own products, brokers have access to a wide range of lenders, including major banks, credit unions, and private lenders. This allows them to have access to mortgage options that may not be directly available to you.

They also help manage your mortgage application from start to finish, including paperwork, lender communication, and coordination with appraisers, making the entire process smoother. In many cases, brokers can also pass along volume discounts or reduce their own commissions to offer borrowers lower rates.

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Do mortgage brokers charge fees?

Most of the time, mortgage brokers are free for borrowers to use. That’s because brokers are typically paid by the lender once your mortgage closes. However, compensation structures can vary depending on the broker, the lender, and the type of mortgage product.

In some cases, particularly for complex situations such as private mortgages, alternative lenders, or borrowers with poor credit, a broker may charge a fee directly to the client. This is usually disclosed upfront and explained in writing as part of your mortgage agreement.

How much do mortgage brokers make?

Mortgage broker commissions vary between banks and individual brokers. However, a typical range might be 0.5% to 1.2% of your full mortgage amount. The exact percentage will also depend on the term and type of the mortgage.

For example, if your mortgage amount is $500,000 and your broker earns a 1% commission, they would receive $5,000 — paid by the lender, not you. This cost is baked into the lender’s operating expenses, so you won’t be invoiced for it.

Most lenders pay brokers an upfront commission when a borrower’s mortgage is funded. However, there are two additional structures some lenders may offer:

Trailer fees: This fee is paid to brokers over time, for as long as the borrower stays with the lender. These will normally be paid in exchange for a lower upfront commission. Trailer fees are intended to disincentivize brokers from recommending regular lender switching, which isn’t always good for borrowers.
Renewal fees: This fee is paid to the original broker when a borrower renews their mortgage with the same lender. While this might increase the likelihood of a broker recommending you renew with your current lender, a broker would also get paid if you were to renew with a new lender. It’s always a good idea to compare rates at renewal time, regardless of how your broker gets paid.

Also read: Renewing your mortgage in 2025? Here’s what to expect

Is it better to get a mortgage from a bank or a broker?

There are pros and cons to using both mortgage brokers and to getting a mortgage from a bank directly. Generally, we recommend you compare rates from a range of both mortgage brokers and mortgage providers in order to get a better understanding of what’s available to you.

Here are some of the differences between getting a mortgage through a broker vs. going to a lender directly:

It’s also worth noting that not all brokers work with all lenders. While most mortgage providers do offer their mortgages via brokers, some only sell mortgages directly.

Are mortgage brokers worth the cost?

Brokers often have access to exclusive rates that aren’t available directly to the public, and many are willing to reduce their commission — known as “buying down the rate” — to offer you a more competitive deal.

While there’s no guarantee that using a broker will always result in the lowest possible rate, there’s little downside to consulting one. Mortgage brokers are generally free for borrowers to use, and there’s no obligation to proceed if you’re not satisfied with the options they present. It’s a no-risk opportunity to explore the market and get expert advice tailored to your situation.

Other important things to consider

There are a few important things to consider when speaking to a broker.

Ask about trailer fees: Find out if they earn any trailer or renewal fees from a particular lender. While these commissions won’t necessarily stop a good broker from getting you the best deal, they could influence a broker’s recommendation. You need to know if that’s the case.
Your circumstances are important: Remember that your personal circumstances can affect how much help a broker can offer. If you have bad credit, too small a down payment or are locked into a restrictive mortgage contract, it could be hard for a broker to find you a better deal.
Check their lender access: Not all brokers work with the same set of lenders. Some may have strong relationships with major banks, while others may specialise in credit unions or alternative lenders. Ask which lenders they work with to make sure you’re getting a full view of the market.

The bottom line

A broker’s job is to save you money, and they’re generally effective at doing so. Thanks to Canadian regulations and the importance of referral business, it’s very unlikely a broker will make recommendations against your best interests.

However, it’s important that you understand how commissions work for mortgage brokers to give you the confidence that their recommendations are not affected by financial incentives.