Jumat, 17 Juli 2009

How Much Does your Home Loan Consultant Mortgage Intelligence Earn Four your Mortgage?

As a borrower, you want to know all of the matters that affect how your mortgage (Intelligence Hypoth├ęcaire) will be negotiated. Here are two important features you may want to know about.
-Brokers get a fee based on the size of the mortgage, not on the interest rate of the mortgage.
-Mortgage consultants may receive 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 right to be curious, because it is critical to know the incentive of each party to a transaction so you can better understand issues such as conflict of interest, etc.

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

There are some cases when the commission can be increased slightly. These cases are based on: the term of the home loan - hypotheque, certain variable rate notes, and for how long a mortgage is guaranteed, in guaranteed mortgage products.

Interest rate does NOT influence the fee a broker (courtier hypothecaire) will earn. So there is no incentive for the mortgage consultant 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.)

One way mortgage consultants do generate higher fees is by participating in a volume program with a lending institution. If a broker gives a certain number of loans to the same lending institution, he can earn more commission, sometimes as high as 25% over the original fees.

Smaller brokers are influenced by this incentive, but it has no effect on larger mortgage consultants. Brokers such as Mortgage Intelligence, that originated 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 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 lender for you, not the one that will give your broker an additional commission.

Gregory writes articles for http://www.infohypothecaire.com/ - Pret hypothecaire. To have more information about mortgages, please visit one of his websites:
http://www.infohypothecaire.com


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