Have you been curious about the in’s and out’s of a mortgage broker? Today on the episode, we talk to Tommy Lim from SF Capital about how a broker actually gets paid.
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Here’s the transcript of the video:
So how do you get paid am I as the buyer or the potential got taking out the mortgage? Am I paying you is the bank paying you how do you guys actually make money? Okay. So for most home lending, the client doesn't pay the brook anything for their services the book The Brokers paid by the bank on success for successfully settling the loan. Okay. So it's only after the advice has been given the client has instructed the broker to go ahead the client trust the Brokers to I guess execute on the instructions and put in place the process to get the loan only when the the loan settles does the broken get paid gotcha. There's two components to what a bro who gets paid. Yeah, there's an upfront commission. So that's what I spoke about as well as Trail commission. So there's been a lot of commentary and conversation about what trail commission actually is and does. Yeah, but essentially there was a time when Brokers only got paid upfront and A lot of negative behavior. Yes. So if you paid once off a large sum of money then the ongoing service and the loyalty to that bank isn't their Brokers and once they all broke is but there's a there's a behavior called churning which may happen when it's a upfront only remuneration structure. So what banks decided was to actually defer a part of a broker's commission as Trail so that created I guess I broke it to behave in the best interest of the client. Yeah to give them an ongoing service and to make sure that they want just turned out for the sake of another commission. Okay. Got you.