How is established the commission of your -consultant hypothecaire-home loan consultant?

Working with a mortgage broker (Intelligence Hypothécaire) is beneficial for a buyer for a number of reasons, and here we will discuss two of them. It is important to know that mortgage consultants receive fees on the size of the mortgage, not the interest rate, and that they can receive added commission for volume transactions with one bank.

You may have wondered how your mortgage broker (Intelligence Hypothecaire) is remunerated, since you do not pay him. This is an important thing to know, since you want to know what will motivate the broker to increase his income.

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

Outside of a couple of special situations, the broker cannot change this arrangement. These are the circumstances in which the fee will change depending on certain things:

-The length of the term of the mortgage- hypotheque

-Some variable home loans

-The duration of time the home loan rate is guaranteed for.

Interest rate does NOT influence the commission a mortgage consultant (courtier hypothecaire) will earn. So there is no incentive for the broker to find a higher rate for the customer. This is in contrast to some bonus programs that banks offer their employees. (Read “Will my bank offer a better rate than a broker?” to learn more about this.)

There is a system whereby brokers can increase the fees they make and that is by doing volume business with one bank. If a brokerplaces all of his home loans with one bank, after he reaches a certain volume, he will earn additional commissions, which can be sizeable, frequently 20%-25% more than the standard commission.

Smaller brokers are induced to use this incentive, but it has no effect on larger mortgage consultants. Brokers such as Mortgage Intelligence, that processed over $8 billion in loans in 2005, or Multi-Pret/Mortgage Alliance with over $5 billion in home loans easily reach the limit on all volume business, and so are not tempted to work with one bank.

What information can we draw from these all of this? First of all, we do not have to be concerned that a broker will be tempted to get higher rates for his client in order to increase his fee. Secondly, working with a large mortgage consultant 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 fee.

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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