Mortgage advisor - commission for selling mortgages and insurance??

Dillon141

Hello,

How much commission do mortgage advisors receive for selling mortgages? I have heard it is around 0.35%.  Is that accurate?

How about selling insurance then along with the mortgage?  What types of insurance are we talking about? Is it life insurance and/or mortgage protection insurance? What commission do brokers get for this? Is it true that it is around 1% to 1.5%?

Any mortgage brokers able to comment on this from their experience?

Thanks

kingstreet

0.35% is about right for the mortgage.

Commission on life cover, critical illness and income protection depends on the premiums paid and typically premiums have to be paid for four years or some/all of the commission is clawed back. As I mentioned on the "Can I take out income protection...?" thread on Insurance & Life Assurance;-

"An intermediary who is independent can usually source L&G cover cheaper than a tied agent. The latter can often negotiate higher commission based on loaded premiums in return for the tie. An independent can also compare cover/providers and find you the best terms as well as the lowest premium."

Dillon141

kingstreet said:

0.35% is about right for the mortgage.

Commission on life cover, critical illness and income protection depends on the premiums paid and typically premiums have to be paid for four years or some/all of the commission is clawed back. As I mentioned on the "Can I take out income protection...?" thread on Insurance & Life Assurance;-

"An intermediary who is independent can usually source L&G cover cheaper than a tied agent. The latter can often negotiate higher commission based on loaded premiums in return for the tie. An independent can also compare cover/providers and find you the best terms as well as the lowest premium."

Thanks for your reply.

So how would that work in practice? There is no set or average percentage?  The commission might be different for a policy with a premium of £1000 than a premium of £2000, percentage wise?

dunstonh

How much commission do mortgage advisors receive for selling mortgages? I have heard it is around 0.35%.  Is that accurate?

That is the ballpark but remember that, like most businesses, that is not pure income to the adviser.   Business costs will have to offset that.    Whilst small local independent firms will likely have lower costs, the salesforce advisers will usually have to give up much more of that income to their employer.

Dillon141

dunstonh said:

How much commission do mortgage advisors receive for selling mortgages? I have heard it is around 0.35%.  Is that accurate?

That is the ballpark but remember that, like most businesses, that is not pure income to the adviser.   Business costs will have to offset that.    Whilst small local independent firms will likely have lower costs, the salesforce advisers will usually have to give up much more of that income to their employer.

Yes I meant for an independent mortgage advisor firms, I should have stated that sorry.  What about someone who is independent and has a small firm but is attached to someone like Primis or has access to their network of lenders will they have to give up a lot of that commission to them?

kingstreet

We are members of a network and our mortgage business also passes through L&G mortgage club. As an example, a gross procuration fee of 0.4% would see 0.37% paid to our network. Our network and other costs come out of that.

On Life/CI etc the commission rate we receive will be the same regardless of the premium. Some tied agents charge higher premiums and will receive both higher rates (due to the tie) and higher amounts (due to the premium size). We also have the option of taking commission as a lump sum (indemnity terms) or spread over the 48 month initial period (on the drip) and many of us take commission on the drip on large cases so we avoid large clawbacks if the cover is cancelled or lapses in that 48 month period.

ACG

You can not really work out what percentage a broker a gets in commission. 
If you keep the policy for 4 years, the percentage will be higher than if you keep it for 10 years or 20 years. 

However, the last policy I did was going to cost the customer £7,209 if they kept it for the full 30 years. The commission was £651, which is about 0.09%. That £651 is paid on the drip over 30 years btw. 

caprikid1

"Yes I meant for an independent mortgage advisor firms, I should have stated that sorry.  What about someone who is independent and has a small firm but is attached to someone like Primis or has access to their network of lenders will they have to give up a lot of that commission to them?"

Primis are a very large network with enormous leverage in the market (there are other IE Sesame), although they take their cut they also provide many services as part of that which a typical IFA would need to pay out. Far more brokers operate via a network such as Primis, Sesame etc as they get better service and support for often like for like costs. IE Compliance, Fee processing, Software supplied free etc. There are many DA's going under networks these days so they truly must believe that the cost is largely neutral.

I genuinely would not get overly excited of Network vs Broker not via a network as for the broker it is unlikely to be costing the end consumer, in the event of things going wrong in the application etc they often have pools of experts and contacts greater influence in the market place.

If you look at Mortgage fraud it is normally less within networks as they often have better oversight then IFA's.

K_S

Dillon141 said:

Hello,

How much commission do mortgage advisors receive for selling mortgages? I have heard it is around 0.35%.  Is that accurate?

@dillon141 With respect to mortgages - you can see all the commission (procuration fees) rates here for all lenders. https://www.legalandgeneral.com/adviser/mortgage-club/lenders/procuration-fees/ In most cases it's the 'gross-fee' that is paid out by the lender. 

Then, depending on how the firm operates, there are potentially various intermediaries - mortgage club, network, etc. which take a cut before it gets to the firm. How it flows beyond that will depend on how the individual advisor is set up - employed, self-employed, etc.

Dillon141

kingstreet said:

We are members of a network and our mortgage business also passes through L&G mortgage club. As an example, a gross procuration fee of 0.4% would see 0.37% paid to our network. Our network and other costs come out of that.

On Life/CI etc the commission rate we receive will be the same regardless of the premium. Some tied agents charge higher premiums and will receive both higher rates (due to the tie) and higher amounts (due to the premium size). We also have the option of taking commission as a lump sum (indemnity terms) or spread over the 48 month initial period (on the drip) and many of us take commission on the drip on large cases so we avoid large clawbacks if the cover is cancelled or lapses in that 48 month period.

Let me get this correct.....

If you arrange a mortgage of £200,000, the commission at 0.4% would be £800, but the network get 0.37% of this 0.4%? They get £740?   I'm wrong right?  How much do you actually get in your own hand after the Network takes it's share?


EDIT -- Ahh the Network gets the 0.4% and you receive 0.37% - correct?

Dillon141

K_S said:

Dillon141 said:

Hello,

How much commission do mortgage advisors receive for selling mortgages? I have heard it is around 0.35%.  Is that accurate?

@dillon141 With respect to mortgages - you can see all the commission (procuration fees) rates here for all lenders. https://www.legalandgeneral.com/adviser/mortgage-club/lenders/procuration-fees/ In most cases it's the 'gross-fee' that is paid out by the lender. 

Then, depending on how the firm operates, there are potentially various intermediaries - mortgage club, network, etc. which take a cut before it gets to the firm. How it flows beyond that will depend on how the individual advisor is set up - employed, self-employed, etc.

Thank you.

This is for mortgage commission right? Is there a list for insurance and protection?