Good day. My name is Ben Everingham, and I’m the Director here at Pumped on Property, and in today’s short and sweet video, we’re going to talk about how much do mortgage brokers make.
Good day. My name is Ben Everingham. I’m the Director here at Pumped on Property, and we’re a buyer’s agency, who have helped our clients from all over Australia and the world buy over a hundred million dollars worth of investment property in Australia, and in today’s video, I’m going to talk about how much mortgage brokers make.
So, the cool thing about mortgage brokers is they’re completely free in Australia at the moment for you. That means that they get paid by the bank, so I think that’s a huge thing, a weight off our shoulders. I think they’re one of the best quality services in Australia for the actual price that they charge, which is absolutely nothing to us. There are a few brokers in Australia that charge an upfront price, but I think that’s more got to do with their sales process than what they actually do.
So, mortgage brokers are free, which is absolutely awesome. They get paid in two different ways by the banks that they work for. So, your average broker might work between five and 30 different banks or financial institutions in Australia. They get an upfront commission paid by the bank when they get you the home loan, and this can range from lender to lender and who the mortgage broker works with as their aggregator.
The other way that they make their money, the second way is through a reoccurring income stream for the life of the loan, as long as you remain with the bank that they signed you up with. So, there’s a reason why a lot of mortgage brokers don’t like to refinance your property too quickly. They don’t like to chip and change you between lenders, even if a lender is giving you a better rate, and that is because if they chip and change you too regularly, the bank will pull back that upfront commission that they make, and they’ll, also, lose that trailing commission that they get from the bank every year.
So, let’s say you buy a $400,000 home to live in or investment property. The broker might make between $2,000 and $5,000 in upfront, and they might make somewhere between $400 and $1,000 per year in reoccurring revenue. So, you can imagine that if they’re writing a couple of hundred lines a year, and they’ve been in the business for a while, mortgage brokers can make really, really good money.
But I think what I’ve learned from being in the industry for a while now is that a great mortgage broker is worth their absolute weight in gold, and I’ll give you an example of this. A few years ago, I moved from Sydney to the Sunshine Coast in Queensland. I found what I thought was a great property at a good price at the time. At that time, I’d used a mortgage broker once and I’d used a bank manager from one of the big four banks a number of times. I went to that bank manager and said, “I’ve found this great home. I really want to buy it.” At the time, it was worth $370,000. She said, “Unfortunately, because of your income and your expenses, you can’t afford to borrow that money,” and I let the house go.
I met a mortgage broker two weeks later that said if I had worked with him and we could have gone to a different lender, I would have easily been able to buy that property. A few years later now, that house just sold in exactly the same condition for $650K, like literally within three years. So, the cost of not having a very good mortgage broker or a bank manager around you can be very high.
So, I hope you’ve enjoyed this video. I’ve got heaps more awesome videos on my channel, which is Pumped on Property. You can subscribe to my channel now. Love you to come check out the website, www.PumpedOnProperty.com. If you’re looking to buy an investment property, I’d more than happy to talk about the Australian market with you, and offer you a one-on-one complimentary strategy session, which you can book by just clicking free strategy session on our website.
Until next time, thank you so much for your time today. Talk soon.