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How Much Do Mortgage Brokers Actually Make In Canada? - YouTube
Channel: Nolan Matthias
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hey welcome back it's nolan mathias from
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marge 360 and one of the things i'm most
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passionate about in this industry is
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being the most
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open and honest and transparent mortgage
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brokerage that we can possibly be
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that's why we took the steps a few years
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ago of becoming the first b corp
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certified mortgage corporation
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in north america that is a certification
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around transparency accountability
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and social and environmental impact and
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that is the reason today why i want to
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discuss
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how mortgage brokers are paid how much
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they make and what that means to you
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when you go to get a mortgage
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specifically what it means for the
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interest rate that you pay but before we
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get into it do that favor
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hit that subscribe button hit that
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notification bell and please hit that
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like button so more people like you can
[37]
see this video and don't forget about a
[38]
race of 10 000 subscribers where
[40]
one lucky winner is going to win their
[42]
mortgage or rent payment for a month
[44]
just for subscribing to this channel so
[45]
go ahead hit that subscribe button it's
[47]
free and it's definitely worth
[48]
the definitive guide on how to manage
[50]
your credit
[51]
product penalty price it's never been
[54]
more important to get your organ right
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okay so let's get into it let's answer
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that question how much
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do mortgage brokers make because this is
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a question that in
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certain provinces a mortgage broker has
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to answer in certain provinces
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you don't have to answer it but in a lot
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of cases it is something that
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is really misunderstood and quite
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frankly you can go and you can google
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the information how much does a mortgage
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broker make in canada
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you'll find a whole bunch of different
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articles but what i want to do is set
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the record straight
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and tell you exactly how the pay
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structure for a mortgage broker works
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and what that means to
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you when it comes to getting your
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interest rate because how much mortgage
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broker makes
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actually has a lot to do with how much
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you end up paying for your mortgage
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so let's get into it let's have that
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conversation and let's start by taking a
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look at the public data the information
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that we find on google when it comes to
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how much
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a mortgage broker makes in canada so
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this is from
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indeed.ca this is the number one job
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site in canada
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you can go into indeed and you can look
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up any sort of profession and see what
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the typical
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incomes are and as you can see the
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average mortgage broker makes about 81
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000
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in canada according to indeed now that
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may seem like a lot of money but
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it isn't the full story and i'll get to
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that in a minute
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but for the most part if you're
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considering a career in mortgages 81 000
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a year seems pretty good depending on
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where you are in the country you may
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make more or less
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and a lot of that depends largely on the
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size of the mortgage
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but 81 000 isn't your actual take-home
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pay so let's break this out and discuss
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exactly how much mortgage brokers
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actually make how much actually ends up
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in their pocket at the end of the day
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and how much they make on an average
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transaction that you would do
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so let's take a look here i'm going to
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switch to this screen
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and we're going to start by going
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through the typical mortgage now average
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mortgage
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amount in canada is about 325 thousand
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dollars and
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the average commission what most lenders
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pay is about one percent
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which makes the average commission that
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a mortgage broker makes from doing a
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transaction the revenue that they
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generate the gross commission
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thirty two hundred and fifty dollars now
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that may seem like a lot but that
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isn't the full amount that a mortgage
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broker is going to get to take home
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because there's a lot of expenses that
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go along with being a mortgage broker
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and what i'm going to do is i'm going to
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give you two examples of how mortgage
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brokers would get paid
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one for a brand new agent or a single
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agent that doesn't have a team
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and one for a small brokerage or team
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brokerage like ours that does have a
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team
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so let's start with the new mortgage
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broker and the first thing that you need
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to understand about a mortgage broker is
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that their biggest expense
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is typically going to be marketing
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without marketing without networking
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without going out and meeting people and
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talking to people
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there basically is no business so a
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typical mortgage broker will spend at
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least 25 percent of their income
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on marketing and it actually doesn't
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matter the size of the mortgage broker
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whether they do a small amount or a
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large amount
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most put about 25 of their revenues into
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marketing and
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that's pretty much what we've found
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across the industry now obviously
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there are different types of models out
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there this isn't true for everybody
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there are models that spend less on
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marketing there are models that spend
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more on marketing
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but this is just the general guideline
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the average mortgage broker in canada so
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by the way the mortgage brokers who are
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watching this because that will
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inevitably happen
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understand that this is average not
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everybody and
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your situation is always going to be
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different than other people so keep that
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in mind when you hit the comment section
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now the next major cost for a mortgage
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broker is
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their brokerage fees and other expenses
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so the brokerage fees will typically be
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anywhere between
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5 and 25 percent and then they'll have
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other expenses like legal fees for
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setting up their corporation they'll
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have
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licensing fees they'll have more fees
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with respect to
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accounting and so on and so forth and
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that basically takes up another 25
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which is half of their income gone
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between marketing and brokerage fees and
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expenses
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right out of the gate so that eighty one
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thousand dollars immediately goes down
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to forty thousand dollars
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so after marketing expenses and business
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expenses and brokerage fees
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that leaves about half of their income
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left and twelve point five percent of
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that or twenty five percent of what's
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left over
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is typically going to go towards taxes
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we can't avoid that all of us pay taxes
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mortgage brokers are no different
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which leaves about 37 and a half percent
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of the income
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that they've generated actually going
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into their pockets at the end of the
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year
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so think about that from the perspective
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of a mortgage broker who is earning
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82 000 a year or 81 000 a year according
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to indeed
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the amount that they're actually putting
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in their pockets is about
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26 to 28 000 a year which puts them into
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the
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income bracket of somebody who is making
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maybe 50 or 60 000
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a year not a very significant source of
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income when you put it in the grand
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scheme of things so
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that perception that mortgage brokers
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make a ton of money it actually isn't
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really true
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to put this in perspective a mortgage
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broker who generates 81 000 in gross
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commission per year is going to do about
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25 mortgages those 25 mortgages are
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going to be extremely hard to find
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because everyone has a bank everyone has
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a realtor who's recommending a mortgage
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broker
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and finding those 25 clients is actually
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the majority of the job mortgage brokers
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at least the ones who know what they're
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doing and the ones who make it typically
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spend about 60 to 70 percent of their
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time trying to find deals
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build relationships and basically get
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the opportunity to do a deal
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and then only about 30 to 40 percent of
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their time actually working on deals
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and making the actual incomes so even
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though 25 deals doesn't seem like a lot
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of deals to do it actually takes a lot
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of effort to get to the point where
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you've actually got the ability to do 25
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deals in a year
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now one thing that i want to note at
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this point is that when you
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ask a mortgage broker to get you a lower
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rate typically what you're asking for is
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not for them to go to the bank and
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negotiate you a lower rate what you're
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asking them for
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is for them to reduce their commission
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in order to get you a lower rate because
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what doesn't happen is
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i can't go to a lender like first
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national or scotiabank and say hey this
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is a really great client and i really
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love them so you should give them an
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extra point one percent off
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if i give a client an extra point one
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percent off so basically take their rate
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from 1.64 to 1.54
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the way that i do that is by cutting my
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commission in half and for mortgage 360
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for our company we have a policy where
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we don't do that and the reason why is
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because it's simply not fair and honest
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to everybody
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if i do it for one person i need to do
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it for everyone and what we don't want
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is we don't ever want a client finding
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out that we gave somebody a better deal
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than we gave them
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and went above and beyond for somebody
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but not for somebody else everyone at
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mortgage 360 is treated equally
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but when you ask for a mortgage broker
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to get you that point one percent off
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and when they give it to you
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one is they're doing something that they
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wouldn't necessarily do for everybody
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and two is you're effectively asking
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them to decrease their income by half so
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if your employer came to you and said
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hey
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can you do your job for half the price
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what would you say to them in most cases
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the answer would be absolutely not right
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in fact i think in almost all cases
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the answer would be absolutely not well
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when you're asking a mortgage broker to
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get you that slightly lower interest
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rate or get that point one percent off
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which is the price of a cup of coffee
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every week
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you're asking that that mortgage broker
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to basically take a 50
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reduction in their income which can be
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the difference between them making a
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mortgage payment and not making mortgage
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payments so keep that in mind when
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you're negotiating with your mortgage
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broker
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now let's discuss a more established
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broker with a team which is something
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like what mortgage 360 would look like
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and you'll notice that the marketing
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cost is still about the same we're still
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spending about 25
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on marketing and when we start to get
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bigger and start to grow our brokerage
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fees and our expenses start to go down
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so maybe we get a better split from our
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brokerage because we're doing more
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volume
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and maybe we're just getting some
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economies of scale because we're growing
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more
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the things like the legal costs and the
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accounting costs stay the same while our
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incomes grow
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but then there's this added cost because
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once you get to doing about 100
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mortgages a year
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which is about 250 000 in gross revenue
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you start to need help doing more than
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that becomes really really difficult
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there are people out there that are
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freaks of nature
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they can do more than 100 transactions
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on their own in a year but most people
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will need an assistant at this point
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which usually ends up costing about 25
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percent of the revenue now the hope is
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when
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a mortgage broker gets an assistant that
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they'll be able to grow their revenue
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more than what the cost of that
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assistant was
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but in almost every case you're going to
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end up giving a pretty large proportion
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of your income
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to that assistant if you are to find a
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good one that's full-time
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that is actually going to be able to do
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the job so then after that we've got
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about 35 percent of our gross revenue
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left
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seven and a half percent of that is
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going to go to taxes or about 25
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of the net revenue that we have and then
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the rest
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is ours to keep now you have to start to
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grow and get pretty big before it starts
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to make a ton of sense to have a ton of
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employees
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and to have a big brokerage it's really
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really difficult so
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if you were to take a brokerage that
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makes a half a million dollars in gross
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revenue at the end of the year
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well the owner of that brokerage is
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still only taking home about 125 000
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a year which isn't lawyer money it isn't
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doctor money you know it's maybe the
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type of money that an engineer would
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make or a professional would make
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but it's only a little bit more or about
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50 percent more than what the average
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mortgage broker makes now obviously as a
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team or a broker grows and gets to
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another level of 750 000 or a million
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dollars yes the profits start to go up
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but rarely does a mortgage broker exceed
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the income of a really good lawyer or a
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really good doctor
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yes there's an opportunity to provide a
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ton of value out there
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the opportunity to do a ton of mortgages
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and make a really really really good
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income
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but it is definitely a lot harder than
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it looks and getting those first 25
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mortgages
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is really really hard there's almost a
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75 to an 80
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failure rate in this industry and
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getting to that 100 deal
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200 deal 300 deal a year mark is really
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really difficult especially
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if you've never been taught how to
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deliver the value have that conversation
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about that what that point one or point
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two percent really means to that client
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and end up working for half the income
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and only working for twelve or fifteen
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thousand dollars a year
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so do me a favor and do our industry a
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favor instead of asking for that point
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one or that point two percent off
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instead of asking for your mortgage
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broker to cut their income in half
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instead ask them to find you the best
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mortgage for the best
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price the one that allows you to have
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the flexibility to save the money down
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the road because if you do what that
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means is that you will be making sure
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that your mortgage broker is being paid
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properly
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but you will also be making sure that
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you have the flexibility to save money
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and ultimately so your mortgage broker
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can help you save money in the future
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just by making sure that you have the
[658]
right product so if you found this video
[660]
useful do me that favor hit that
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subscribe button hit that notification
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bell
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and please hit that like button so more
[665]
people like you can see this video and
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don't forget about a race to 10 000
[668]
subscribers
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where one lucky person is going to win
[670]
their payment for a month
[672]
all you have to do is click that
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subscribe button it's free and it's
[674]
definitely worth it we'll see you on the
[676]
next video
[677]
[Music]
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cheers
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