How are Mortgage Broker's paid?
August 22, 2018 | Posted by: Natalie Wellings
There is sometimes confusion on how a Mortgage Broker gets paid; I get a lot of questions from clients about that. We are 100% commission people and are compensated by the mortgage lender (not the borrower) ONLY when a mortgage funds. If the mortgage does not go through, I don’t get paid. We don’t receive any compensation for pre-approvals, or working on a file that does not get approved. We don’t receive a base pay, or salary. We pay all of the costs of running our business. There are no guarantees for us, similar to a Realtor, financial planner etc.
Another instance where Mortgage Brokers are not compensated at all for the work they do is a mortgage port, where a client transfers their mortgage from one property to another and keeps their existing lender, rate and term. If the mortgage balance remains the same, or decreases, we receive nothing. Lenders allow Mortgage Brokers to complete the transaction for their clients but they don’t pay us anything to do it. Some brokers do not handle ports, they have their client deal with the lender’s customer service department directly because it’s just too much work, especially when you are not being compensated. A mortgage port is more work than a new mortgage as we have to deal with the sale of the existing property and the borrower must requalify for the mortgage meaning current employment documents must be obtained and the borrower needs to qualify under the new mortgage rules.
I recently worked on a transfer for a past client of mine, who was a military person and was posted to eastern Canada. The file took months to complete. I didn’t want to send her to customer service because I knew it would be more stressful for her to deal with the lender directly. I received this amazing email from her this morning and it made my heart smile. Yes, I am in business to make money but that’s not the only reason. If it was I would have left this business a long time ago. It’s about the challenge of getting a mortgage loan completed (not for the faint of heart these days) and being able to play a part in someone’s major life change and make the transaction easier and less stressful for them really fills my cup!
It is so nice to have that recognized!