How Much Does A Mortgage Broker Make? (Ep172) - YouTube

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.