How Does a Mortgage Broker Get Paid?

So, I thought I would explain how a Mortgage Broker is paid along with some things to consider when choosing the right Broker for you.

Whilst some Mortgage Brokers may charge a one-off fee for their services you will generally find most do not charge anything to source the best loan on your behalf. The Mortgage Broker is paid a commission once your loan it is settled. This amount is a percentage of the loan balance and it varies between lenders but is generally between 0.3% – 0.7%.

Your Mortgage Broker will also be paid an ongoing commission on the outstanding balance of your loan each month, this is called trail. Again, the trail amount varies from lender to lender however it is between 0.01% to 0.03% per month.

It is for this reason you will want to make sure your Broker is reputable and trustworthy so you know they are truly choosing the best loan for you and not the loan that will pay them the most commission and or trail.

Another way to ensure your mortgage Broker is recommending the best loan for you is to choose the lender yourself. When I meet with a client I get to know about them, what their short and long-term plans are and what they look for in a Lender. Then I use the computer software to filter out the lenders that suit the client and the best comparison rates available. I present these options to the client along with the pro’s and con’s for each option and together with the client we select the best option. Visit this site for more information :

By structuring my appointments like this it is easy for my clients to see beyond doubt that the commission and trail paid plays no part in what lender gets selected, in fact the selection process is based solely around the individual client and their needs.

In addition to your loan some Mortgage Brokers may receive an incentive when you take up other products such as a credit card and new account. Again, it’s important your Broker has had discussions around your needs to ensure any products or services recommended do meet your needs.

Any commission, trail or payment your Broker is eligible for must be disclosed to you and this can be found in the Credit proposal disclosure documents. Your Broker should issue you with this document before a loan is applied for so you have complete visibility around what commission will be paid and for what. If you have any questions or doubt don’t hesitate to ask your Broker to explain their commission in more detail.

Things to keep in mind when selecting your mortgage brokers Melbourne;

  • Although your Broker must disclose fees and charges to you, you are within your rights to ask for them at any time.
  • Your Broker must disclose their commissions both upfront and trail to you before you sign any loan documents
  • Look for a Mortgage Broker that has access to a range of Lenders, usually between 20 or more so you know you are getting a broad selection
  • Your Mortgage Broker should provide you with a small selection based on discussions you have had with them and this should include comparisons for loan quotes
  • Check that your Broker doesn’t have their own ‘in house lending’ and if so ensure they have no bias towards their loans.

Regardless if you are looking to purchase a property or thinking about getting a second opinion on your current loan it is imperative you have a mortgage brokers Melbourne you can trust to do the right thing by you.