Definition
The mortgage broker is primarily compensated by lenders (banks, insurers, alternative lenders) and not by borrowers in the standard Canadian model.
**Standard commission**: - Finder's fee (placement commission): 0.85-1.2% of the mortgage amount for institutional loans - Example: $400,000 mortgage × 1% = $4,000 paid by the bank to the broker - This commission is included in the lender's pricing — the borrower is not overcharged for using a broker vs. going directly to the bank
**Volume bonuses and enhancements**: - Some lenders offer 'super-commissions' or enhancements to brokers who send them high volumes - These bonuses must be disclosed to the borrower (potential conflict of interest)
**Alternative models**: - **Direct borrower fees**: for complex files (private loan, difficult credit), the broker may charge 1-3% of the amount to the borrower - **File fees**: some brokers charge a fixed fee ($200-$1,500) to cover analysis even if the transaction does not proceed
**Mandatory transparency**: OACIQ requires all brokers to disclose their compensation in the brokerage mandate and when any change of recommended lender could financially benefit the broker.