People are rightly suspicious of free advice, so it is worth setting out where the money actually comes from.
The finder's fee
When a mortgage funds, the lender pays the brokerage a finder's fee. It is typically a percentage of the mortgage amount, varying with the term: a five-year term pays more than a one-year term, because the lender expects to hold the mortgage longer.
The fee is paid by the lender out of their own margin. It is not added to your mortgage, it is not built into your rate, and you do not see it on your statement.
The reason lenders do this is straightforward economics. Monoline lenders have no branches at all and acquire every mortgage through brokers, which is cheaper than operating a retail network. Banks pay brokers for the same reason: it is less expensive than acquiring the customer themselves.
So the fee is a distribution cost the lender was going to incur one way or another. Using a broker does not add it.
Does it change my rate?
No. The rate you are offered through a broker is the lender's broker-channel rate, and it is frequently sharper than the rate the same lender's branch would quote, because the broker channel is competitive in a way a branch conversation is not.
The common worry is that a broker will steer you to whichever lender pays the most. The honest answer is that finder's fees across mainstream lenders are broadly similar, so the incentive to steer is weaker than people assume. But it is a fair question and you are entitled to ask it directly: does any lender on your panel pay you more than the others, and does that affect your recommendation.
A straight answer to that tells you what you need to know about who you are dealing with.
When a fee does apply to you
Three situations, and in all of them it must be disclosed in writing before you commit to anything.
Private lending. Almost always involves a broker fee, commonly one to two percent, alongside the lender's own fee. The work is greater, the lender pays little or nothing, and the deal is short-term. See private mortgages.
Some alternative and B-lender deals. Sometimes a fee, sometimes not, depending on that lender's compensation. Ask on the first call. See B lender mortgages.
Commercial deals. A broker fee is standard, typically a percentage of the loan, because commercial files take far longer and lender compensation is different or absent.
What should never happen is a fee appearing late. In Alberta, disclosure of broker compensation is a regulatory requirement, not a courtesy.
Is a broker's rate actually better?
Often, and not always, which is the honest answer.
What a broker reliably provides is comparison. One credit pull goes to a panel of banks, credit unions and monoline lenders, and you see what each will actually do. Sometimes that produces a better rate than your own bank. Sometimes your bank matches or wins, which is a perfectly good outcome and one you can only reach by having something to compare against.
The larger value is usually placement rather than price: getting a file to a lender whose rules fit your income and your property. On a straightforward salaried file with excellent credit, the difference may be small. On a self-employed file, a variable-income file, or anything with a recent credit event, it is frequently the difference between yes and no.
What the fee is not
Two clarifications, because both come up.
It is not a referral kickback from a lender for sending business regardless of suitability. It is a distribution cost, paid on funding, at rates published in each lender's broker agreement. In Alberta the arrangement is regulated and compensation must be disclosed on request.
And it is not charged twice. If your mortgage moves lenders at renewal, the new lender pays a fee on that new mortgage. You are not paying anything either time, and there is no accumulating cost to having used a broker repeatedly.
What to ask before you start
How are you paid on my specific deal. Will any fee be charged to me, and if so how much and when. Does any lender on your panel pay you more than the others. And can I have that in writing.
Every one of those is a normal question with a normal answer. Reluctance to answer any of them is the useful signal.
The wider case for using a broker at all is on what a broker does that a branch cannot, and the questions worth asking of anyone you are considering are on choosing a broker.