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Phone: 778-859-7195     Email: yiannis@yiannisandreou.com

Transparency on Mortgage Broker Compensation

Last Updated: November 17, 2019

For clients with credit scores over 600 that meet all lender parameters for Income, GDS/TDS ratios, Credit & Property location – The Prime(A) lender pays a fee when the credit score is over 600 and the client does not have to pay a fee as long as the quality of the house, the strength of the income and all the other factors meet the guidelines of prime lenders.  In the event the client does not meet prime lender guidelines due to a GDS/TDS ratio that is higher than allowed, income that is not-verifiable or insufficient, equity take-out(increase of mortgage) amount requested that exceeds the $200,000 maximum allowed by insurers in a refinance or location that is not desirable to the lender due to the low total population within 50 kilometers, the guidelines of applicants with non-prime credit profiles that follow come to effect.  Any of the preceding very important factors can disqualify an application with a prime lender.  In this case, the guidelines for clients with weaker credit or a non-prime credit profile or a beacon score under 600 apply.  If an applicant meets all of the Lending Parameters except for one such as Debt Ratios or Credit and we need to use an Equity Program via an A Lender the Guidelines that follow for Alternative Mortgages apply.

 

Residential Mortgages – For clients with weak credit or a non-prime credit profile or a beacon score under 600 or for those that use a Pure Equity Program of a Prime Lender Alternative Mortgage Guidelines Apply B Lenders pay a referral fee and Private Lenders do not pay a referral fee.  In such a case, for B Lenders the standard fee is $3,750 for residential loans up to $310,000 and 1.25% of the loan amount for residential loans from $310,000-$1,000,000 for terms of 1-3 years and 1.50% for terms of 4-5 years.  For Private Lenders the standard fee is $3,750 for residential loans up to $215,000 and 1.75% of the loan amount for residential loans from $215,000-$500,000.  For Private Lender Loans over $500,000 – $1,000,000 the standard Mortgage Broker fee is 1.60%.  For Private Lender Loans over $1,000,000 the standard Mortgage Broker fee is 1.30%.  For the sake of transparency, in the event a B or Private lender pays a referral fee, I will only charge the difference to arrive at the standard fee of $3,750.  For example, on a $200,000 loan where the lender pays a 1% fee of $2,000, I will only charge the difference of $1,750 to arrive at the standard fee of $3,750.  A Broker Agency Agreement along with FICOM Form 10 will be completed in order to provide full details and transparency on each transaction.

 

Commercial Mortgages– Commercial Lenders do not pay a fee.  In such a case the standard mortgage broker fee is $3,750 for commercial loans up to $215,000 and 1.75% of the loan amount for commercial loans over $215,000 and up to $500,000.  For Loans from $500,000 – $1,000,000 the standard Mortgage Broker fee is 1.60%.  For Loans over $1,000,000 the standard Mortgage Broker fee is 1.30%.   Please bear in mind that a Retainer(Consulting) fee independent of the mortgage broker fee is charged on every commercial mortgage that is subtracted from the brokerage fee in the event it funds successfully.  The main reason a Retainer(Consulting) Fee is charged is that in many cases commercial loans fail to fund due to Location, Weak Financials, Appraisal Concerns, Environmental Concerns etc.  In some cases they fail because the client is able but unwilling to accept the Terms of the Lender.  The standard Retainer fee for a Commercial Mortgage is $3,750 and is due at the beginning of the application process.

 

Construction Mortgages : A fee applies that is paid by the client and can be included in the mortgage amount.  The fee applies both to prime and non-prime clients as Private Lenders do not pay a fee for construction mortgages.  In such a case the standard mortgage broker fee is $3,750 for construction loans up to $215,000 and 1.75% of the loan amount for construction loans over $215,000 and up to $500,000.  For Loans from $500,000 – $1,000,000 the standard Mortgage Broker fee is 1.60%.  For Loans over $1,000,000 the standard Mortgage Broker fee is 1.30%.

 

Business Loans – Lenders do not pay a fee in most cases for Business Loans.  In such a case the standard mortgage broker fee is $3,750 for Business Loans up to $215,000 and 1.75% of the loan amount for Business Loans over $215,000.  Please bear in mind that a Retainer(Consulting) fee independent of the mortgage broker fee is charged on every Business Loan that is subtracted from the brokerage fee in the event it funds successfully.  The main reason a Retainer(Consulting) Fee is charged is that in many cases business loans fail to fund due to Weak Financials, Viability Concerns, Credit Concerns, Extreme Fluctuations in Asset Value Concerns(Bitcoins, Stocks) etc.  In some cases they fail because the client is able but unwilling to meet the Terms of the Lender.  The Standard Retainer(Consulting Fee) is $3,750 or 25% of the total expected Broker Fee whichever is lower with a minimum of $3,750.   For the sake of transparency, in the event a lender pays a fee, I will only charge the difference to arrive at the standard fee of $3,750.  For example, on a $200,000 loan where the lender pays a 1% fee of $2,000, I will only charge the difference of $1,750 to arrive at the standard fee of $3,750.

 

Appraisal & Title Search –  They are both the responsibility of the borrower.  The cost of an appraisal is between $300-$600 depending on the location for residential properties and anywhere from $3,000-$10,000 for commercial properties.  A title search costs between $25-$30 and is a requirement with a lender approval to confirm that there is no other liens on a property by a Builder, Canada Revenue or any other third party.  The appraisal and the title search can be ordered at the same time from the selected appraisal firm.  Note that Appraisal Reports belong to the Lender and are not released to a client at the conclusion of a mortgage.

 

Fees when a client has a non-prime or weak credit or a beacon score under 600 are paid when the mortgage funds and never in advance in Residential Mortgages only.  This policy does not apply to Commercial and Business Loans per the preceding sections that clarify that a Retainer(Consulting) fee applies.  Residential Mortgage Fees also apply per the Exclusive Agency Agreement found at the very top of the page.  The mortgage broker fee is covered by loan proceeds when there is sufficient equity in an asset(Real Estate, Gold, Bitcoins, Silver etc.).  Alternatively, it is covered from client’s personal funds in the event of a purchase, refinance or construction mortgage where there is no extra equity in the property.

 

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