What are the extra fees for private mortgages in BC

December 28, 2025 | Posted by: Alex Vinarski

Understanding the True Cost: Fees for Private Mortgages in Canada

When you’re considering a private mortgage, looking at the interest rate is just the start. To avoid surprises and budget correctly, you need a clear understanding of all the fees involved.

As a mortgage broker, I believe in complete transparency. Unlike banks, private mortgages have a different fee structure. Here’s an honest, detailed breakdown of all the costs you can expect in Canada—and specifically in BC.

The Full Picture: Where Your Money Goes

The fees fall into three main buckets: mandatory third-party costs, lender/broker fees for the loan itself, and potential future costs.

1. Mandatory Third-Party & Legal Fees

These are hard costs to finalize the transaction. In BC, for a private mortgage, you typically pay for two lawyers: one for you and one for the lender.

  • Appraisal Fee: The only upfront cost you pay out-of-pocket. A certified appraiser determines the property's value.

    • Cost: $400 - $600. This is paid directly to the appraisal company.

  • Legal Fees (The Biggest Cost): This covers the legal work to register the mortgage. You pay your own lawyer/notary, and you also pay the lender's legal fees.

    • Total Typical Cost: $2,500 - $4,000.

    • Why so high? You are covering two sets of legal work to protect both parties' interests.

  • Legal Fee Deposit: Before the deal is sent to the lawyers, the lender will often ask for a deposit (e.g., $1,000) to be held in trust. This ensures the lawyers are paid for their work even if the deal falls through at the last minute.

2. Lender & Broker Fees (The Cost of the Loan)

This is how private lenders and brokers are compensated for providing fast, flexible financing that banks cannot. In BC, it is illegal for a broker or lender to charge their fee for residential mortgages if the mortgage does not fund.

  • Combined Lender & Brokerage Fee: This is a one-time fee, calculated as a percentage of the loan amount. It is almost always deducted from the mortgage proceeds at closing—you don’t pay it in cash.

    • For a 1st Mortgage: Typically 2% of the loan amount.

    • For a 2nd Mortgage: Typically 4% of the loan amount.

  • Example: On a $300,000 private first mortgage with a 2% fee, $6,000 would be deducted from the funds advanced to you. You receive $294,000.

    • Administration/Processing Fee: Some lenders charge a flat fee to cover the application processing and paperwork.

      • Typical Cost: $250 - $500.

3. Future Fees to Be Aware Of

  • Renewal Fee: If you extend the mortgage for another term, some lenders charge a fee.

    • Cost: A flat fee (e.g., $250) or a small percentage.

  • Discharge Fee: When you fully pay off the mortgage, a lawyer must file a discharge to remove it from title. The government filing fee is $75, but you will also pay a legal fee for this service.

    • Total Typical Cost: $250 - $400.

Why This Fee Structure Exists

These fees reflect the reality of private lending:

  • Risk & Service: Lenders take on higher-risk scenarios and provide a specialized, fast service.

  • Legal Protection: Dual legal representation ensures the transaction is secure for everyone.

  • No-Fund, No-Fee Protection: The BC rule protects you—you only pay the major lender/broker fee if you actually get the money.

Key Questions to Ask

  1. “Can I get a full, written breakdown of the combined lender/broker fee and the estimated total legal fees?”

  2. “What is the required legal fee deposit, and when is it due?”

  3. “Are there any other charges that will be deducted from the mortgage proceeds?”

The Bottom Line

While the fees are higher than a bank's, a private mortgage is a strategic, short-term solution. You pay for speed, flexibility, and access to funds when other doors are closed. The goal is to use this loan to improve your situation and refinance to a lower-cost mortgage in 1-3 years.

Need a clear, guaranteed fee breakdown?

I provide all my clients with a transparent cost estimate before we proceed. No hidden fees, no surprises.

More information on private mortgages here: https://www.ipotekacanada.com/index.php/private-mortgages

Back to Main Blog Page