I just finished meeting with my advisory board and heard about a sizable deal that recently closed. It was for a very large private mortgage, well over twenty-million dollars. My immediate question was “What do you charge on a twenty-million-dollar private mortgage?”

The answer wasn’t as simple as I thought it would be.

In fact, my question should have been “What factors do you take into consideration when deciding on your fee?” The broker replied he takes the following 5 factors into consideration when deciding his broker fee:

  1. Lender Risk
  2. Competition
  3. Lender Fee
  4. Complexity of File
  5. # Days To Close


  1. Lender Risk – When determining lender risk, a full appraisal is critical to help set the private lenders mind at ease. On a new construction build, project scope, type of home, comparable sales and comparable days on market should be analyzed. Factors such as low LTV, strong sales and low days on market all limit the lenders risk and will increase comfort on proceeding with the deal. The higher the risk, the higher the fee.


  1. Competition – there are a lot of private lenders willing to lend on luxury homes, but generally speaking, when you start asking for funds over the $10 million-dollar mark, the competition between the # of private lenders tends to become scarce. The harder it is to source a private lender with deep pockets, the higher the fee.


  1. Lender Fee – the broker will usually try to match his fee with the lender fee. For example: if the lender is charging 0.50% lender fee, the broker will not charge a 1.50% fee, he will keep his fee in line with the private lender.


  1. Complexity of File – complicated files that require more time and effort to put together will have higher broker fees vs. straightforward files.


  1. # Days To Close – if the client is in a complete panic because they’ve already put an offer down, waived conditions to finance and then realize they cannot get financing completed through their bank (that promised the client it would be a no-brainer), and there is a rush involved to get the file closed, the broker will charge a higher fee.


To reward you for reading the entire article, here’s what he ended up charging on this loan: 1% broker fee, 1% lender fee. If you need help finding private lenders with deep pockets, please don’t hesitate to get in touch with me to discuss.