How Much Does A Mortgage Broker Make? (Ep172)
Articles,  Blog

How Much Does A Mortgage Broker Make? (Ep172)


Mortgage brokers are paid on a commission
basis from the banks or the lenders that supply you with your loan. So how much do mortgage
brokers make? We are going to break this into two categories, firstly, how much they make
per deal and secondly how much they generally make per year. Hi, I am Ryan from onproperty.com.au, your
daily dose of property education and inspiration. Today we’re talking about mortgage brokers
and more specifically how much they make per deal and how much a mortgage broker tends
to make per year. Mortgage brokers tend to offer a free service to consumers, so if you’re
looking for a home loan, you can go to a mortgage broker and you won�t actually be charged
any money for their services and I also added an episode 167 which you can check out at
www.onproperty.com.au/167 that shows why this doesn’t actually make your loan cost any more
money either, so it is realistically a free service to you. So, how much do they get paid
per deal? Truthfully it’s very hard to give you an exact number of how much a mortgage
broker is going to make on a deal. Fees pay to mortgage brokers vary significantly from
lender to lender and there is also variations based on how much volume they do or how large
the loan amount is. Mortgage brokers also tend to work with an aggregator which is someone
that brings all the lenders together for the mortgage broker to access. Now, those aggregators
will also take a cut themselves and how much of a cut that aggregator takes, varies from
aggregator to aggregator. So you have got a lot of different varying factors that will
determine how much your mortgage broker takes home at the end of the day. Okay, in saying that, a mortgage broker is
generally paid in two different ways, firstly, the largest portion of their payment is in
an upfront commission when you sign on to your loan; the second portion is a recurring
commission that is calculated based on the remaining loan amount each year and is paid
on a monthly basis. So let’s look at upfront commission. Upfront commissions vary from
lender to lender, but they tend to be around to 0.3 – 0.7% of the loan value, with 0.7%
being quite high up there, you are more likely to see commissions on the lower end of that
spectrum or even below the 0.3% mark. On a $500,000 mortgage, this equates to about $15,000
for 0.3% or up to $3,500 for 0.7% commission. It’s important to note that if you sign up
with a loan through a mortgage broker and then either refinance or close down your loan
for any reason, within the first 12 to 18 months in most circumstances, the mortgage
broker will actually have to refund the upfront commission that they had been paid on that
loan. It’s important to know this because it may be in your contract with the mortgage
broker that if you default or if you close your loan for any reason you may have to pay
the mortgage broker for that refund. Secondly, let’s look at trailing commissions.
Now it is not guaranteed that your mortgage broker is going to get a trailing commission
on a deal that they do because then again it varies from lender to lender. Some lenders
offer absolutely no trailing commissions and some lenders offer somewhere between 0.0%
to 0.3% based on the remaining value of the property. Now 0.3 is on the high end, it�s
probably more going to be around the 1% to 2% range. So, on a 500,000 mortgage, if you
are interest only and it just stays at that balance, at 0.2%, that works out to about
$83 a month that the mortgage broker is going to get. Now, given that the typical life of
a loan is somewhere around the four-year mark, it is not a massively significant figure.
Now $83 a month is nice but remember that the aggregator is still going to take their
cut out of that as well and there are a lot of lenders that don�t actually give you
that trailing Commission. How much does the average mortgage broker
make in an annual salary? Now obviously they’re not paid an annual salary, they are paid based
on commissions and if the mortgage broker works under someone else within someone else’s
business then this is going to be skewed because they’re likely going to get maybe a base salary
and then paid commissions on top of that, that is going to be much smaller. But generally
speaking, a mortgage broker is probably going to make somewhere in the $60,000 to $70,000
per year; with mortgage brokers who are not as active and are not as good making somewhere
around the $30,000 to $40,000 mark; and mortgage brokers who are amazing and who do a really
good job, well truthfully the sky’s the limit, but you are probably looking maximum of somewhere
around a $100,000 or $120,000 or something like that. So I hope that explains to you, how much a
mortgage broker makes. Mortgage brokers do a lot of work and I really appreciate what
they do, there is so much paperwork that they do, they also give you access to so many different
lenders. So, do I always recommend that people go to a mortgage broker? See a mortgage broker
first to try and get your loan, because they can help you get the loan that best suits
you. If you want to deal directly with my mortgage broker, then head over to onproperty.com.au/mortgage
and fill out your details to get a free consultation. So until tomorrow, remember that your long-term
success is only achieved one day at a time.

13 Comments

  • AlexHallsYT

    Just a heads up to any potential mortgage brokers here. Trailing commission also referred to as "legacy commission", and has been heavily clamped down on in the UK. Point being, i wouldn't expect this form of payment to still be a factor.

  • Fiona Bryce

    would you also like to do a video on what it costs for that broker to write that loan?? banks outsource the process, so they aren't paying staff, computers, office space etc etc…..and how bout we look at what it costs to maintain and service the client.

  • Stephen

    if brokers are paid different comissions by different lenders then there is incentive for them to sell you loan that he make most money on?

  • Reality Home Loans

    Seriously did you even research the topic. Most upfronts are .55% plus gst. Trail is .05 plus GST. Nearly all are at this level regardless of the loan amount. This doesn't get added to your rate. Yes aggregators take a cut of our commission so once again nothing that effects the consumer. Pretty simple mate!

  • Erick Voorhies

    I am a broker, this dude doesn't know what he's talking about. there are no recurring payments, truth is, on average it's about 1 1/2 percent of the loan amount, not including your processing fee of about $500. period!

  • Master Mortgage Broker Sydney

    Being a mortgage broker is getting harder by the day, however that doesn't bother me as the cream will rise to the top. However, with all the new compliance requirements it's now taking 50-80% more time to process a loan application, but nobody'e talking about compensating brokers for the extra work.

Leave a Reply

Your email address will not be published. Required fields are marked *