BROKER FEE - What is a Reasonable Fee?
Mortgage brokers typically get paid a commission from the lender and do not need to charge a broker fee for their services. Though, private lenders do not pay commissions and hence brokers do need to charge a fee for their service.
There are no strict rules for what brokers can charge for their service. So, it is up to the individual broker on what they want to charge. However, there are some generally accepted industry fee guidelines that have evolved.
Here is what I see as reasonable fees for brokers to charge:
- For 1st mortgage (registered in first position) a reasonable broker fee is 1% of the mortgage amount.
- For 2nd mortgage (registered in second position) a reasonable broker fee is 3% of the mortgage amount.
If it is a low mortgage amount then it is reasonable to charge a minimum fixed fee by the broker.
There are a lot of options out there for private lending. Some good lenders and some predatory lenders. Fees and prices can be significantly different from one broker to the next. It is worth taking the time to shop around when looking for private lending.
Make sure that you are working with a good broker that has your best interest at heart and is charging accordingly.
For more information on what is a reasonable broker fee, contact your local Ajax Mortgage Broker, Sean Stewart at 905-427-9596 or email@example.com