Definition
Mortgage origination fees (or processing fees) are administrative charges billed by a lender or broker for assembling, submitting, and processing a mortgage application.
With A-lenders (banks, credit unions): origination fees are generally zero on new mortgages, but may apply on refinancing or special products.
With B and alternative lenders: fees of 0.5% to 1% of the mortgage amount are common. On a $400,000 loan, that represents $2,000 to $4,000. These fees can sometimes be financed into the loan (added to principal).
With private lenders: fees of 1% to 3% are standard, to which annual renewal fees of 0.5% to 1% are often added. The total cost of a private loan must include these fees in the effective annual rate calculation.
Broker fees: in Quebec, mortgage brokers are generally compensated by the lender commission (finder's fee) and do not charge the borrower for a standard A-file. Fees may apply for complex files (B, private) or difficult credit situations.