What is the average mortgage agent’s salary?
First, Let’s Define Who A Mortgage Agent Is
Before discussing the average mortgage agent salary, let’s define who a mortgage agent is. A mortgage agent is an individual licensed by the Financial Services Commission of Ontario (FSCO) who arranges financing for a borrower through a lender. The borrower can be a live person or a corporation or business. Mortgage agents deal with more than one lender, with the goal being to find the best product for their borrower. They may have access to as few as a handful of lenders, to as high as fifty or sixty lenders, depending on their geographic location. The lender may be an individual, referred to as a private lender, or an institutional lender such as TD Canada Trust or ScotiaBank. The main difference between a mortgage agent and a mortgage broker is that a broker must pass an additional course and can be the compliance officer of a brokerage (referred to as the Principal Broker) and can manage other mortgage agents. There is no difference in the commission that a broker receives in comparison to an agent.
First, let’s be clear: a mortgage agent doesn’t earn a salary. A typical Canadian mortgage agent is paid commission by the lender that he or she funds his or her borrower’s mortgage through. For example, if a borrower requires a mortgage in the amount of $500,000 to buy a house in the GTA and the mortgage agent / mortgage broker can place the deal with TD Canada Trust, then the bank will pay the broker a finder’s fee or commission. This amount is based on a number of basis points (bps), or “beeps” as they’re commonly referred to in the brokerage industry. For example, 10 bps is the same as .1%.
In this example, if TD is paying 85 bps, then it would pay:
85 bps x $500,000
= .0085 x $500,000
Now, the next point to keep in mind is that this amount is not paid directly to the mortgage agent / mortgage broker, rather it is paid to the brokerage. The agent will have a contract with their brokerage that stipulates the percentage of the commission that the agent will keep, and the percentage of the commission that the brokerage will keep. While there are many models, the average is 85% for the agent and 15% for the brokerage. With this model in mind, the commission on this transaction would be:
85% x $4,250
= .85 x $4,250
Therefore this broker would earn $3,612.50 on this transaction. Of course, these figures don’t include applicable income taxes payable by the agent as brokerages will not deduct income taxes since the agent is considered an independent contractor. But to answer the question of the average mortgage agent salary, we’d need to know how many of these transactions he or she was doing per month. Let’s say an average of three. Let’s do the math:
$3,612.50 x 3 deals per month x 12 months in a year
= $3,612.50 x 3 x 12
= $130,050 (in this scenario this licensed mortgage agent / mortgage broker would be earning an average of $130,050 per year)