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How much does a Mortgage Broker cost 2021

Average Price
$250 per hour

How much does a Mortgage Broker charge?

Want to purchase a property but confused about mortgage prices? Read on to find out how much it will cost to work with a mortgage advisor.

What is a Mortgage Advisor?

A mortgage advisor (sometimes referred to as a mortgage broker), is a qualified professional who specializes in getting you the best mortgage deal based on your circumstances. 

Unlike traditional lenders, mortgage advisors are not tied to a particular institution. Instead, they have access to a broad network of deals and may also be able to offer special incentives.

Unlike a lender, a mortgage advisor will be able to tell you in a much quicker time frame whether you’d qualify for a mortgage or not. They put a strategy together based on the outcome to help you move to the next stage. Mortgage advisors also liaise with the lenders on your behalf, which otherwise can be quite time-consuming. 

A mortgage advisor will act as a link with mortgage lenders, solicitors, and estate agents to get your mortgage agreed upon in the fastest and efficient manner. 

How much does a Mortgage Broker cost? 

The pricing structure for mortgage advisors is complex because they can charge an hourly, fixed, or even a combination fee. To give you a rough idea, let’s take a look at the average hourly rate for a mortgage advisor across Canada: 

Mortgage Broker costs
Minimum cost (per hour)$100
Maximum cost (per hour) $400

What changes the cost of a Mortgage Broker? 

Several factors impact the price of getting a mortgage advisor:

  • Pricing structure

  • Arrangement fee

  • Booking fee

  • Early repayment charge

  • Exit/closure fee

  • Mortgage account fee

  • Valuation fee

Pricing structure 

Mortgage advisor charges are complex because it depends on the pricing structure of the lender or individual you go to. They could also charge you a combination fee, which as the name suggests is a set fee plus a commission.

Mortgage Broker prices
Price structure Highest average price Lowest average price
Upfront fee$3,000 $1,000
Hourly rate $400$100
Commission2% 0.50%

The commission amount will depend on the size of the loan, which will be determined by several factors including the property type and your location. 

For example, if you bought a home for $300,000 then the mortgage advisor would earn between $1,500 and $6,000 in commission.

Just like the property you wish to purchase, it is certainly worth shopping around for a mortgage advisor. That’s because each will have different pricing structures and varying levels of fees. 

Arrangement fee

A mortgage arrangement fee is otherwise known as a product or completion fee. It is a charge that you will pay to the lender for the actual product. You have the choice of adding the fee to the mortgage itself, though this will incur more charges. The average cost of an arrangement fee is between 1% of the total loan and  2%of the total loan. 

Booking fee

A booking fee is also known as an application or reservation fee. It is a fee that is charged upfront for purchasing your loan while the application goes through. The booking fee averages out at around 4.5% of the total loan cost for most of Canada, although some lenders won’t charge you at all. Be aware that if your mortgage falls through, a booking fee is usually not refundable.

Early repayment fee

Mortgage lenders make the majority of their profit through the interest rates they charge over time. If you pay the mortgage back early, they will not receive the same level of income from your mortgage. This will result in you being charged an early repayment fee.  

Not all mortgage deals are subject to a repayment charge, but if they are, then you’ll need to pay between 1% and 5%  on the total value of the loan. For example, if your mortgage was $327,000, then your fee would be between $3,270 and $16,350. You may also be asked to return any incentives or cashback offers if applicable.

Exit/closure fee

Once you have repaid your mortgage, then you will be subject to an exit fee. Typically, exit fees are between 1.5 % and 4%  of the purchase price. In some cases, you don’t have to pay an exit fee, such as if your mortgage account fee covers set up and maintenance charges.

Mortgage account fee

A mortgage account fee covers all the costs associated with setting up your mortgage. If you pay a mortgage account fee, you typically don’t have to pay an exit fee. The average mortgage account fee is between $1,000 to $5,000

Valuation fee

Depending on the value of the property, you’ll be charged between $300 and $500  to have it valued by your mortgage provider. This ensures the property is worth the amount you intend to borrow. Depending on your preferences, you could arrange your valuation.

Getting a Mortgage Broker - is it worth the cost? 

Given the average mortgage takes 25 years to pay off, and is one of the biggest financial decisions you’ll ever make, it pays to seek advice before you jump in. Most people will only take out one mortgage in their lifetime. However, a mortgage advisor spends every day working in the industry. This means they are best placed to help you get a deal that works for your circumstances. 

While a mortgage advisor is an upfront investment, hiring a reputable one can save you a lot of money in the long run, so a worthwhile investment. 

A mortgage advisor acts as a middleman between you and the lenders. In many cases, they can bypass the lengthy process that securing a mortgage normally involves. A mortgage advisor may also be able to get you a better deal depending on their experience. 

Take the pain out of applying for a Mortgage with the help of a trusted Mortgage Advisor with Bark.

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