How much do mortgage brokers make?

Ever wonder how much a mortgage broker makes? At Red Key Mortgage, we believe in absolute transparency with our clients. So, here it is.

Today, I’ll focus on commissions paid to mortgage brokers for AAA residential lending, which is our primary market. It’s worth noting that there are other classes of mortgages with different compensation structures, such as B, private, or commercial lending.

Mortgage brokers in Canada currently facilitate around 50% of the residential mortgage market. So, how do brokers get paid? Banks, credit unions, and monoline lenders pay brokers a finder’s fee for facilitating a mortgage with their clients. This fee typically ranges from 80 basis points (bps) to 1% of the loan amount, but it can vary from as low as 1/4% to as high as 2% in unique situations.

For example, on a $300,000 mortgage, a broker would generally earn around $3,000. The length of the mortgage term also influences the fee—lenders pay less for shorter terms and more for longer ones.

In addition to the finder’s fee, some lenders pay volume bonuses or perks based on the amount of business a broker brings to them. That’s why it’s so important to work with a broker you trust, to ensure they’re recommending the best lender for you—not just for their benefit.

Some lenders also operate on a trailer model where they pay less upfront but continue to pay over time, but this is fairly uncommon.

At Red Key Mortgage, we’re committed to openly discussing the pros and cons of each lending option, so you can make an informed decision about which lender is worthy of your business.

Video Highlights:

How Much Do Mortgage Brokers Make?
A transparent breakdown of how mortgage brokers earn commissions for AAA residential lending, with details on typical compensation structures.

Commission Structures for Different Mortgage Types

Explanation of how commissions vary between different classes of mortgages, such as AAA residential, B, private, and commercial lending.

How Brokers Get Paid
Insight into how brokers earn finder’s fees, which range from 80 basis points (bps) to 1% of the mortgage loan amount, with examples of earnings based on mortgage size.

Impact of Mortgage Term on Commissions
Discussion of how the length of the mortgage term affects the finder’s fee, with lenders paying more for longer terms and less for shorter ones.

Volume Bonuses and Perks
An overview of additional compensation brokers may receive from lenders based on the volume of business they bring in, emphasizing the importance of working with a trusted broker.

The Trailer Model
A brief mention of the less common trailer model, where brokers receive smaller upfront payments but are compensated over time.

Commitment to Transparency
An overview of additional compensation brokers may receive from lenders based on the volume of business they bring in, emphasizing the importance of working with a trusted broker.

Takeaways

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  • Mortgage brokers earn commissions by facilitating mortgages, typically receiving between 80 bps and 1% of the loan amount, with fees varying based on the mortgage term.
  • Different mortgage types—AAA residential, B, private, and commercial—have distinct compensation structures, influencing how brokers are paid.
  • Volume bonuses and perks can incentivize brokers to work with specific lenders, underscoring the importance of choosing a broker who prioritizes your best interests.
  • The trailer model, while uncommon, offers a different compensation approach where brokers receive continuous payments over time rather than a lump sum upfront.
  • Red Key Mortgage values transparency and provides clients with open discussions about their lending options, ensuring they make well-informed decisions that best suit their needs.
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