How are Mortgage Brokers Paid? 

Qualified Mortgage Brokers offer a free service to you the client and then they are paid a commission by the lender.

A qualified mortgage broker in Australia has achieved a required level of education and they abide by a strict Code of Practice.  They are also required to be a member of the Mortgage Industry Ombudsmen Service.

The minimum level of education required is the Certificate IV in Financial Services (Mortgage Broking) FNS40810 and some lending institutions require the additional modules to complete the Diploma in Financial Services (Mortgage Broking)FNS50310.

The commissions received by mortgage brokers are a once off upfront fee which is worked out as a percentage of the loan amount.

This commission is paid to do the work that a bank manager would normally do. They may also receive an ongoing trailing commission as payment for continuing to assist with their client’s ongoing home or investment loan administration requirements.

They are paid by the borrower in the form of a loan origination fee, mortgage broker fees, processing fees, etc.  The funds used to pay these fees can come from loan proceeds and closing costs in the purchase transaction. They can range from 0% to 4% depending on the loan amount and situation.

Many times a mortgage broker will only receive compensation from one of these sources but can get it from both.  In some cases they won’t charge anything as far as loan origination fees, etc. but receive compensation from the lender.  In other cases they might  charge a loan origination fee etc. but not get any compensation from the lender.

Make sure that the broker does not let the size of the commission they will be paid by a lender cloud their judgment. While some lenders pay higher commissions, brokers should not favour higher commission-paying lenders over others. Under the MFAA Code of Conduct, MFAA Members are required to disclose any commissions upon request.

Most brokers do not charge a fee for their service and are paid by the lenders they introduce the loan to.

If they do charge an upfront fee, then ask why and they should provide a valid reason for doing so. They should be objective and offer at least a comparison between 3 to 5 lenders as a bare minimum.

It all really depends on what the client is trying to accomplish and their plans for the property. Just remember no one works for free and mortgage brokers can typically get you a better deal than most banks and usually have more funding sources to offer clients.

Intellitrain provides online and face-to-face training courses for the 

Certificate IV in Mortgage Broking, Diploma in Mortgage Broking, 

Diploma in Financial Planning as well asCert IV in Bookkeeping and Sales Training Courses in Adelaide, Brisbane, Canberra, Melbourne

and Sydney.