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.