How Mortgage Brokers Get Paid in Canada

A Transparent Guide for Homebuyers

If you’re searching for a mortgage broker in Canada, or trying to understand how mortgage brokers get paid, you’re not alone. Many homebuyers want to know whether they’re paying fees, how lenders compensate brokers, and what makes one brokerage different from another.

At Frank Mortgage, transparency is part of our DNA. This guide explains exactly how mortgage brokers are paid on A-lender mortgages, B-lender mortgages, and private mortgage deals, and why Frank Mortgage stands out, especially when it comes to broker fees.

How Mortgage Brokers Get Paid on A-Lender Mortgages

A-lender mortgages, usually referred to as “A-deals”, are funded by major Canadian banks, credit unions, and monoline lenders. Sometimes referred to as ‘prime’ mortgages, these are the most common mortgage type seen in the market and can include both insured and uninsured mortgages. A-lenders work with a wide variety of mortgage borrowers who meet standard income, credit, and qualification guidelines.

Here’s how compensation works on A-mortgages:

The first important thing for you to understand is that working with a mortgage broker for an A-mortgage will not cost you anything. The lender pays the mortgage broker, not the borrower.

• Payment is typically a percentage of the mortgage amount, known as a ‘finder’s fee’, that usually ranges from about 0.50% to 1.0%, but can sometimes be a bit higher.
• There are no mortgage broker fees charged to the customer on A-lender mortgages.

Mortgage brokers have access to multiple lenders, in addition to banks, so they can often find you better rates and improved deal terms over what you might find at your bank. Plus, the mortgage broker will provide expert advice and help guide you through the entire mortgage process. This is pretty good value for a service that is free.

How Mortgage Brokers Get Paid on B-Lender Mortgages (Alternative Lending)

B-lender or “alt-lender” mortgages are available to mortgage borrowers when they may not qualify with traditional banks. Reasons for needing a B-mortgage can include self-employment, credit challenges, high debt ratios, or unconventional income.

In the B-mortgage space:

• Many mortgage brokers charge brokerage fees directly to the customer.
• Some B-lenders often pay lower commission to mortgage brokers.
• B-lenders also charge an origination fee, so borrowers may be paying both the lender and mortgage broker a fee in the alternative/B-mortgage market.

While most mortgage brokers in Canada charge fees for B-mortgage deals, Frank Mortgage does not charge customers a fee on B-deals. This is one of our biggest differentiators.

At Frank Mortgage, our compensation for B-deals comes solely from the lender, helping our customers save hundreds or thousands of dollars in unnecessary fees. We believe in keeping alternative lending as accessible and affordable as possible, especially for customers who are working through short-term financial or credit challenges.

If you're searching for a B-lender mortgage broker in Canada with no broker fee, Frank Mortgage is one of the few brokerages that offers this.

How Mortgage Brokers Get Paid on Private Mortgages

Private mortgages are funded by private lenders who are primarily mortgage investment corporations (MICs) or individual investors. These lenders take on more risk and therefore operate differently.

Key compensation details:

• Private lenders do not pay mortgage brokers a finder’s fee.
• Because of this, mortgage brokers must charge a broker fee to the customer.
• Fees are usually a percentage of the mortgage amount and are deducted from the mortgage proceeds at closing.
• Private lenders may also charge lender fees, separate from the mortgage broker fee, so borrowers pay both the lender and mortgage broker a fee in the private mortgage market.

At Frank Mortgage, we keep private lending fees transparent, fair, and clearly disclosed so customers always know what to expect. 

If you're researching a private mortgage in Canada, it’s important to work with a broker who explains fees upfront and does not overcharge. This is especially true in the private mortgage market which is not regulated the same way as traditional mortgages.

You should also be aware that mortgage broker and lender fees may be as low as 1% each for a private mortgage deal but can range to as high as 5%. It is obviously in your interest as a mortgage borrower to work with the mortgage broker and private lender that can deliver what you need at the lowest cost so shop around and try to minimize the fees you need to pay.

How Mortgage Brokers Compete

In today’s competitive Canadian mortgage market, brokers often compete on rate. Larger mortgage brokers may get preferred rates from lenders they send significant volume to. Others may reduce their commission to buy down a rate for a customer. Either way, the competitive nature of the market works in your favour.

It is also important to work with a good mortgage broker that has access to a large pool of mortgage lenders. Those that do and show no bias in helping you select which lender is best for you are the mortgage brokers you should choose.

Note that some mortgage brokers say they work with a lot of lenders but only submit their deals to a couple or a few. The volume bonus compensation structure for mortgage broker fees paid by lenders (i.e. lenders pay more, the more a mortgage brokers closes with them) incentivizes some brokers to steer customers to their favorite (and highest paying) lenders. This can work against the interests of the borrowing customer. Be aware of the reasons why a mortgage broker recommends a lender to you and always ask to see options.

At Frank Mortgage, how we are compensated does not influence our advice. We show you the available options and let you select what lender you prefer, regardless of what they pay us.

Why Frank Mortgage Is One of Canada’s Most Transparent Mortgage Brokerages

At Frank Mortgage, we believe Canadians deserve clarity and fairness when arranging a mortgage. Here’s how we stand out:

• No broker fees on A-lender mortgages
• No broker fees on B-lender mortgages (rare in the Canadian mortgage industry)
• Broker fees only on private mortgages, because private lenders do not pay brokers
• Consistently competitive mortgage rates from a large selection of Canada’s top lenders
• Expert guidance through A-lenders, B-lenders, and private lenders
• Zero hidden costs, clear disclosures, and upfront communication

Whether you’re buying a home, renewing your mortgage, refinancing, or exploring alternative or private lending options, Frank Mortgage makes the process simpler, clearer, and more cost-effective. 

Please reach out to us at 1-888-850-1337 or find us at www.frankmortgage.com to experience the Frank Mortgage difference.