A mortgage broker get paid for his effort in bringing a mortgage deal to a mortgage lender. He or she is not an employee of any mortgage lender, but works independently helping borrowers with their home financing needs. The compensation is only paid when a mortgage financing deal is successfully completed.
Direct Compensation
Depending on the types and terms of the mortgages being funded, a mortgage advisor may be compensated from 50 bps to 80 bps on the traditional fixed term and variable term mortgage products. The commission payable by a lender is based on the mortgage loan amount, and 100 bps fee is amounting to 1% of the loan amount. Some mortgage lenders use a matrix system while others may change the compensations according to the special promotions or rate discounts they offered.
Volume Bonus
This is an additional commission payable on the deal by a lender to a mortgage company based on a mortgage company's annual business volume target set by a lender. A larger and more established mortgage brokerage will likely be compensated with the highest volume bonus payment of 35% or more.
Commission Split with Brokerage
Majority of the Canadian mortgage companies set individual sales targets for their broker, and the split a mortgage broker receives may range from 75% to 90% of the direct commission and volume bonus. The annual commission a mortgage broker receives varies and is largely dependent on the number of deals the broker is doing.
Other Fee Incomes
There are other incomes a mortgage broker may get from direct sales of Money Merge Account system, referring mortgage life insurance, referral fees from real estate referral deals, commercial mortgages, mortgage investment corporation, etc.
Broker Fees on Non-traditional Loans
There are other income opportunities for a mortgage broker. He or she may get paid on sub-prime mortgages, private mortgages, construction loans and other mortgage services provided by the broker.
Trailer Fees - Your Business Model
Some mortgage bankers are working on compensation models that enable a mortgage broker to build up their book of business by retaining mortgage borrowers book of business through renewal of borrowers' mortgages. TMG will be providing a TMG Mortgage that will help the brokers to build their own mortgage businesses and keep their customers.
This is the future direction and change to mortgage origination and customers retention business model for any mortgage broker. Being paid once for placing a mortgage and only having less than 20% chance of being paid again the second time when a client's mortgage is due for renewal is not for your long term interest.
Have questions you like to get the answers, you can view the my mortgage savings website or email me.
Comments(0)