Real Estate

Mortgage broker commission

  • Last Updated:
  • May 21st, 2017 5:43 pm
Sr. Member
Dec 19, 2010
986 posts
523 upvotes

Mortgage broker commission

What is the average commission a mortgage broker makes on a per $100k borrowed? Just curious, a broker is giving me a cashback offer on a $400k fixed rate which got me wondering.
Last edited by callmebob on May 20th, 2017 11:20 am, edited 1 time in total.
9 replies
Deal Fanatic
Jan 15, 2017
5750 posts
6123 upvotes
Ottawa
It varies widely from the type of mortgage, mortgage term and interest rate. Most brokers do not offer cash back - it is usually the mortgage lender offering the cash back.

As a range, mortgage brokers can make .40% - 1.00% on a mortgage, depending on the things noted above.
Penalty Box
Dec 27, 2013
8003 posts
4050 upvotes
Toronto
cash back, or part of his commission?

different things.
Jr. Member
User avatar
Oct 21, 2016
117 posts
71 upvotes
Toronto, On.
How about he just earns an income (like other respectable adults) and let him give you what he's comfortable with (regardless what he makes - since he offered)...?
Sales Representative, Right at Home Realty, Toronto.
Deal Addict
Jul 3, 2007
4153 posts
4626 upvotes
Toronto
finders fees are around $700 to $1000 per $100k borrowed, it depends on how much the lender pays and how low the rate is that you got.....
Deal Addict
Jul 3, 2007
4153 posts
4626 upvotes
Toronto
skeet50 wrote: It varies widely from the type of mortgage, mortgage term and interest rate. Most brokers do not offer cash back - it is usually the mortgage lender offering the cash back.

As a range, mortgage brokers can make .40% - 1.00% on a mortgage, depending on the things noted above.
not true....cash back from brokers is a big part of the business now, lenders rarely do any cash backs lately.......those low rates on the internet almost always invlove cash back now

a certain broker on 640am ads has made a business out of advertising very low rates based on not the actual contract rate, but cash back and APR calculations.
Penalty Box
Dec 27, 2013
8003 posts
4050 upvotes
Toronto
yeah, typical mortgage broker is getting between 70 to 110 basis points.. However, if they buy down the interest rate, that will affect their commission. This is separate from lender deals. Cash back from the lender, or cash back from the broker are completely different.

In most cases, if the broker is buying your rate down, he can go from making 90 basis points from a lender to 50 basis points or less. And it's not a 1 to 1 correlation. E.g dropping your rate from 2.59 to 2.49, might cost the broker 30 basis points on his commission.

At the end of the day, if you're going to push for bottom dollar, your service will probably suffer, and it really depends on the broker. It's like any service, if you are going to nickel and dime, they might not care for your business.
Newbie
May 7, 2017
86 posts
37 upvotes
daivey wrote: yeah, typical mortgage broker is getting between 70 to 110 basis points.. However, if they buy down the interest rate, that will affect their commission. This is separate from lender deals. Cash back from the lender, or cash back from the broker are completely different.

In most cases, if the broker is buying your rate down, he can go from making 90 basis points from a lender to 50 basis points or less. And it's not a 1 to 1 correlation. E.g dropping your rate from 2.59 to 2.49, might cost the broker 30 basis points on his commission.

At the end of the day, if you're going to push for bottom dollar, your service will probably suffer, and it really depends on the broker. It's like any service, if you are going to nickel and dime, they might not care for your business.
What exactly do you get from a from a "full service" broker? I find this statement very doubtful. And of course the broker loses 30 basis points because the 10 basis points lowers the interest rate for all 5 years.
Penalty Box
Dec 27, 2013
8003 posts
4050 upvotes
Toronto
onthefence wrote: What exactly do you get from a from a "full service" broker? I find this statement very doubtful. And of course the broker loses 30 basis points because the 10 basis points lowers the interest rate for all 5 years.
it's like any business. you will have 2 types of brokers out there:
1) that will compete just based on price
2) ones that will compete based on service.

So, a full service guy, that's going to hold your hand through the whole process - e.g. most first time home buyers - they might want to deal with someone that is more service oriented.. Someone like that, is less likely to give up all their commissions for you.

Versus, someone that's just going to give you the bottom dollar. E.g. you go to rate super market, click on the lowest price, and go from there and you know all the details/and you think you know everything.

IT's the same argument about going to a major bank, or going through a broker, or through a credit union.... The RFD mindset is that you should get the best deal no matter the cost to everyone else. e.g. the broker shouldn't make any money because you deserve it all.

theres no doubt at all. it's really quite simple. you get what you pay for in most cases.
Deal Fanatic
Jan 15, 2017
5750 posts
6123 upvotes
Ottawa
onthefence wrote: What exactly do you get from a from a "full service" broker? I find this statement very doubtful. And of course the broker loses 30 basis points because the 10 basis points lowers the interest rate for all 5 years.
A full service broker will likely meet face to face with you at your home and get to know more about you. They will want to know what your current situation is, help to determine how your personal circumstances many change in the future and determine your level of knowledge and understanding of mortgages in general. A full service broker will answer all your questions and take the time to explain things fully with you. A full service broker will help you with the application process, provide advice and guidance on how you can make changes to your persona circumstances to improve the quality of your application, and explain what you can expect next. They will explain the different types of mortgages, the pros and cons of each, and also provide you with an overview of the different parties involved in the process and how each helps you with your process.

A full service broker will make suggestions on mortgage types and lenders and suggest different options for you and point out how each of these options meet your needs. They will also discuss any cons with these mortgages. Once you have selected your mortgage and lender, a full service broker will obtain the mortgage approval and meet with you again to present the approval, explain all the conditions and discuss any concerns that you may have with meeting any conditions. A full service will go over all the paperwork with you, make sure that you understand and accept everything that you are signing, discuss with you the risks of selecting your mortgage, discuss with you what actions are considered to be default on the mortgage and answer any other questions that you may have.

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)