How much does a mortgage broker make per deal and how much do they tend to make per year?
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:
- How much they make per deal
- How much they generally make per year.
Mortgage brokers tend to offer a free service to consumers. You can go to a mortgage broker and you won’t actually be charged any money for their services, it is realistically a free service to you.
How Much Does A Mortgage Broker Make Per Deal?
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 Vary From Lender To Lender
Fees payed 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 Use An Aggregator (who takes a cut)
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.
A Broker Is Generally Paid In 2 Different Ways
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.
1. The Upfront Commission
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 $1,500 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 in the first 18 months you may have to pay the mortgage broker for that refund.
2. The Trailing Commissions
Secondly, let’s look at trailing commissions. 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 0.1% to 0.2% range.
On a $500,000 mortgage, if you are interest only and it just stays at the same balance every year. 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 4-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 Annual Salary?
How much does the average mortgage broker make in an annual salary?
Mortgage brokers generally aren’t paid an annual salary, they are paid based on commissions. 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.
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.
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.
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 go here and fill out your details to get a free consultation.