How much does your mortgage broker Mortgage Intelligence earn four your home loan?

By: Gregory van Duyse | Posted: 01st March 2007

As a borrower, you want to know all of the matters that affect how your home loan (Intelligence Hypothécaire) will be treated. Here are two important features you should know about.
-Brokers get a commission based on the size of the loan, not on the interest rate of the mortgage.
-Brokers may receive a volume bonus when they place all of their loans with one bank.

You probably don’t realize how a mortgage broker (Intelligence Hypothecaire) is paid, since you do not pay him. You are right to be curious, because it is important to know the motivation of each party to a transaction so you can better understand issues such as conflict of interest, etc.

Of course, a broker must earn income for his efforts, just as your lawyer, accountant or other professional who performs services for you does. However, in the case of a mortgage broker, his fees are paid by the lender (Intelligence Hypothecaire) he places the loan with. This fee is based on the size of the mortgage, and so the broker has no control over the size of his commission, in most cases. For instance, a $200,000 loan will earn a fee that is twice as much as a $100,000 loan

There are a few special situations where the fee can be increased. Certain factors can change the fee such as
1) the term of the home loan hypotheque
2) certain variable rate mortgage loans
3) the length of time the mortgage is guaranteed for

Therefore, the interest rate is not a determining factor for the earnings of the mortgage consultant - courtier hypothecaire . This is different from some of the bonus plans that banks offer their employees. (See “Will my bank offer a better rate than a broker?” to understand this better).

One way mortgage consultants do generate higher fees is by working with a volume program with a bank. If a mortgage consultant gives a certain number of loans to the same bank, he can earn more commission, sometimes as much as 25% over the original commission.

This kind of program will only appeal to smaller brokers, however. Large brokers meet the required volume easily with many lending institutions, and therefore don’t have to give all of their loans to one bank. For example a broker such as Mortgage Intelligence, who booked $8.1 billion in mortgage loans in 2005 would not be interested in volume programs. Another example is Multi-Pret/Mortgage Alliance, with over $5 billion in loans in 2005.

Now you have two additional pieces of information regarding home loans and mortgage consultants that will help you find the best mortgage for you:
-Brokers earn their fees by the size of the loan; interest rates do not affect the fee of a broker.
-Large brokers are free to examine the loan offerings of all banks, since they do not have to be concerned about volume commissions; this gives the borrower the widest range of lending institutions to choose from.

Gregory writes articles for http://www.infohypothecaire.com/ - Pret hypothecaire. To have more information about mortgages, please visit one of his websites:

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