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If you’re thinking about using a mortgage broker for your home loan or becoming a broker yourself, you’re probably also thinking about the typical salary that a broker earns. What you should know is that a mortgage broker’s salary depends entirely on the business model that they are operating under. Are they employed by a business? Are they a business owner? As a broker, there are plenty of ways of earning revenue, so read on to find out which may be applicable to you.

Earning a mortgage broker salary in Australia

If you were to ask anyone in the industry how much does a mortgage broker earn you would most likely get very mixed results. The truth is that many mortgage brokers don’t earn a fixed salary at all; instead, they are remunerated through commissions on the loans they write.

If you are a mortgage broker that is employed by a brokerage firm or business, there is a good chance that you may earn a salary, but this salary tends to be modest. The average base mortgage broker salary was approximately $54,000 when ASIC reviewed the industry in 2017. A more recent data point according to Seek and Glassdoor, had the average mortgage broker salary between $70,000 and $95,000 – keeping in mind that this figure does not include the earned commissions that mortgage brokers may also earn alongside their mortgage broker salary.

On the other hand, becoming a mortgage broker that operates as an independent contractor may not earn you a salary, but the upside of this is that growing a significant loan book that you own entirely, can earn you much more over the long term than what you could expect to earn as an employee.

But how much can the average mortgage broker earn, in total? The good news is mortgage brokers make significantly more than the national average – and with the housing market going through a period of significant growth, earnings have also continued to rise. So if a mortgage broker salary is rare, how do mortgage brokers earn so much?

In a word: commissions.

What commission means to a mortgage broker

Commissions to a mortgage broker refer to the compensation that brokers receive for their services in facilitating a mortgage transaction. Mortgage brokers typically earn commissions from lenders based on a percentage of the loan amount or a fixed fee. These commissions are typically paid by the lender upon successful completion of the mortgage process. The specific commission structure can vary depending on factors such as the mortgage type, loan amount, and agreement between the broker and the lender.

There are two types of commissions that brokers earn when they write a loan. The first is an upfront commission. This is paid by the bank or lender when a client takes out a loan with said lender. However, if the client refinances within the first two years, banks may require brokers to refund some or all of their commission.

The second type of commission is known as a ‘trail commission’. This is also paid by the lender but instead of a one-off fee, brokers earn ongoing commission from lenders when the borrower pays on time and stays with the lender. In this manner, a broker is rewarded for keeping you as a client. The amount earned is usually a percentage of the balance of the loan, and therefore the trail commission gets smaller as the borrower pays off the loan. For those learning how to be a mortgage broker, it’s important to know that the trail can make up a substantial amount of recurring revenue over time and should therefore constitute an integral part of your business strategy.

How much commission does a mortgage broker get?

The commission amount that a mortgage broker receives can vary based on several factors, including the specific agreement between the mortgage broker, their mortgage aggregator and the lender. Generally, mortgage broker commissions range from 0.50% to 2.75% of the loan amount with trail commissions ranging anywhere between 0.05% to 0.15% of the remaining loan balance, calculated per year, not including Year 0 (when the loan is initially written).

For example, if you had written a $500,000 loan with a lender that delivers a 0.15% trail commission, your earnings could look like this:

  • Year 1: $691
  • Year 2: $577
  • Year 3: $481
  • Year 4: $401

But how much does a mortgage broker earn through upfront commissions? ASIC has previously reported that brokers were paid an average of 0.54% of the loan that they had written. That means that if a broker writes a $500,000 loan, they receive a $2,700 commission.

However, it should be noted that most of the time, banks and other lenders actually pay out much less when their loan products are sold by a third party. So what explains the difference between what the banks pay out, and what the mortgage broker receives? The answer is an intermediary known as a mortgage aggregator.

If you’re learning how to become a broker, it’s important to understand the role of an aggregator, one of the key parties in the mortgage broking business. Good aggregators can provide you with tremendous value as a mortgage broker, so while they may be taking some of a broker’s margin, what they offer in return can significantly improve a mortgage broker’s salary.

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What is the value of an aggregator to a mortgage broker and how can they impact earnings?

Behind the scenes of most successful mortgage brokers lies a mortgage aggregator. While they may not be evident to the client wanting a home loan, who has no interaction with the aggregator, an aggregator plays a crucial role in the mortgage broking industry by providing various services and support to individual mortgage brokers. The value of an aggregator to a mortgage broker is multi-fold. Firstly, aggregators offer access to a wide range of lenders and loan products, simplifying the process of finding suitable options for clients. This increases the broker’s earning potential by expanding their product offerings and allowing them to find competitive rates for their clients.

So how much commission does a mortgage broker get in total? Usually around 80% of what the lender pays out. Despite the extra costs, good mortgage aggregators deliver increased value to mortgage brokers in the form of regulatory compliance, marketing support, access to better deals and much more. Aggregators can also negotiate higher commission rates with lenders on behalf of brokers due to their collective volume of business. This can lead to increased earnings for brokers as they can earn higher commissions on successful loan settlements.

Mortgage broker salaries for self-employed

Mortgage broker salaries for self-employed individuals can vary significantly depending on various factors such as experience, location, client base, and the success of their business. As self-employed professionals, mortgage brokers have the opportunity to set their own earnings based on their efforts and the profitability of their business.

The earning potential for self-employed mortgage brokers can be substantial, especially for those who establish a strong client base, build relationships with lenders, and consistently generate successful loan settlements. However, it’s important to remember that income can fluctuate depending on market conditions, interest rates, and other economic factors. It’s also important to note that brokers must consider factors such as lead generation costs, marketing expenses, and overhead expenses when determining their income.

How do mortgage brokers get paid

Mortgage brokers facilitate the mortgage process by connecting borrowers with suitable lenders and negotiating competitive terms. Contrary to misconceptions, their compensation is typically derived from the lender rather than the borrower. When a borrower secures a mortgage through a broker, the chosen lender compensates the broker with a commission based on the loan amount. This commission structure encourages brokers to secure the best possible mortgage solutions for their clients. While some brokers may charge nominal fees for specialised services, in most cases, the borrower does not incur additional expenses. This arrangement emphasises the value of using a mortgage broker, allowing borrowers to access professional advice, personalised solutions, and favourable loan terms, often without any direct financial impact.

How do mortgage brokers get paid in Australia

In Australia, the process of how mortgage brokers get paid is relatively straightforward. When a borrower successfully secures a mortgage through the services of a broker, the chosen lender pays the broker a commission. This commission is typically a percentage of the loan amount. This compensation structure aligns the broker’s interests with those of the borrower, as it incentivises brokers to secure competitive and suitable loan products.

Importantly, this commission structure means that, in most cases, borrowers do not bear any additional financial burden when they choose to work with a mortgage broker. While there may be nominal fees charged for specialised services in certain situations, the primary source of income for brokers is the commission paid by the lender, highlighting the value of utilising a mortgage broker’s expertise without incurring direct financial costs.

How much does a mortgage broker earn?

So when you add it all up, how much a mortgage broker earns in Australia is dependent on their salary, commissions and trail. The most recent MFAA Industry Intelligence Service reports that the national average for broker remuneration is $161,894. That means broker remuneration is at its highest since the MFAA began to report on this metric.

This result is a continuation of a strong growth trend that began in April 2019. Every half-year since, mortgage broker remuneration has grown an average of 5.4%.

So how much commission does a mortgage broker get in each state? Queensland took home the gold for the highest gross earnings per broker, recording an average remuneration of $168,794. Not far behind was NSW/ACT, and then WA, which recorded earnings close to the national average. Bringing up the rear was the Northern Territory, where brokers earned an average of $141,000.

Something to keep in mind is that these remunerations aren’t a consistent mortgage broker salary. The amount a mortgage broker can earn varies wildly. Remuneration is almost entirely performance-based, and there are usually no baselines. For example, even though the national average of mortgage broker salary including commissions and trail was $161,894, ASIC also reported that 10% of brokers who work as independent contractors make over $250,000 a year.

Such fluctuation can be down to a number of reasons, but due to the commission structure, how much you earn as a mortgage broker is entirely up to your efforts and the partnerships you make. It is for this reason that mortgage aggregators remain an integral part of the ecosystem as they can support brokers through the day-to-day and beyond.

What is the average mortgage broker salary in Melbourne

The average mortgage broker salary in Melbourne can vary based on several factors. According to available data, the average salary for a mortgage broker in Melbourne ranges from approximately $60,000 to $120,000 per year. Jora places the average salary of a mortgage broker in Melbourne between $70,000 and $100,000. It’s worth considering that the mortgage broking industry is highly competitive, and individual earnings can vary significantly based on personal performance and business success. Brokers who are proactive in building their network, cultivating relationships with lenders, and consistently generating loan settlements have the potential to earn higher salaries.

What is the average mortgage broker salary in Sydney?

According to data from Indeed, the average mortgage broker salary in Sydney is approximately $95,000, which is within the general salary range mentioned earlier. It’s important to consider that the difference in average salary between Sydney and Melbourne could be influenced by various factors, including the higher property prices and larger borrowing capacity in Sydney.

Sydney’s real estate market is known for its higher property prices compared to Melbourne, which could result in larger loan amounts and potentially higher commission earnings for mortgage brokers. Additionally, with higher borrowing capacities, brokers in Sydney may have the opportunity to work on more substantial loan transactions, contributing to a potentially higher average salary.

However, it’s important to note that these figures are averages and individual salaries can vary based on personal performance, business strategies, and other factors mentioned earlier. Mortgage brokers in both cities have the potential to earn rewarding incomes based on their expertise, client base, and success in the industry.

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