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

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

You probably wonder how a mortgage broker (Intelligence Hypothecaire) is paid, since you do not pay him. You are justly curious, because it is critical to know the motivation of each party to a transaction so you can more readity understand issues such as conflict of interest, etc.

We all need to be compensated for our efforts, and mortgage consultants are no different. They are paid by the lenderfor placing the loan withthem. The amount of the home loan is what determines the fee the consultant (Intelligence Hypotheque) will earn. The larger the loan, the bigger the fee, (the fee on a $200,000 loan is double the commission on a $100,000 loan) not, the higher the rate, the larger the commission.

Outside of a couple of special situations, the broker cannot change this formula. These are the situations in which the fee will change depending on certain criteria:
-The length of the term of the home loan- hypotheque
-Some variable home loans
-The duration of time the mortgage rate is guaranteed for.

So there is no value or incentive for a mortgage broker (courtier hypothecaire) to increase the interest rate on a home loan. This may be a different case from the special bonus structures that some banks offer employees. (Be sure to read “Will my bank offer a better rate than a broker?”, if you want to know more about this.)

Mortgage consultants can, however, improve their fees by working with one bank. Banks frequently offer bonus programs whereby a broker will earn added commission based on the volume of home loans he brings to the bank. It is an important amount, ranging from 20% to 25% over the original commission.

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

What information can we draw from these facts? First of all, we do not have to be concerned that a broker will be tempted to get higher rates for his customer in order to increase his commission. Secondly, working with a large broker will assure that your loan will be negotiated with the most advantageous lending institution for you, not the one that will give your broker an fee commission.

Gregory is an Accredited Mortgage Professional (AMP). To get more information on mortgages - prêt hypothecaires, please visit: http://www.infohypothecaire.com/hypotheque