Why does a mortgage broker get paid a trail commission?

8 March, 2023 | Alba Tebar

Last Updated on 6 months by Antonio Beltrán

Brokers are one of the main key pieces when talking about mortgages. They are going to be the ones that build a bridge between borrowers and lenders, ensuring a good service for everyone. In a word, they are the puzzle piece that both banks and customers need if they want to get a successful mortgage.

With that information, it is obvious that they play a major role in the mortgage world that has to be somehow compensated. And a trail commission is one of the most common ways to pay it back. In Spain, brokers only got paid once, and that commission is between the 0% and the 6% of the mortgage loan. Also, it is usually paid by costumers and not by banks, as a way of rewarding the services offered by the broker in helping them to find the perfect possible mortgage.

So, in case you are about to buy a new house and you are looking for a good mortgage, you may want the help of an expert. In that sense, you can always rely on Hipotecasplus. We are mortgage brokers that have been working in that field for so many years, that we can call ourselves experts.

Remember, we are the best in finding the type of mortgage that will better fit you, and we will negotiate with banks to obtain it, according to your personal needs and characteristics. What’s more, we can also help you in putting together all the paperwork you will be asked for in order to apply for a loan.

Keeping this in mind, it is always a good idea to count on the help and advice from our team of experts. We will be able to understand your needs and act according to your preferences, always looking for the best option to you. Remember you can always contact us, no commitment is required!

What do mortgage brokers do?

Our job consists in suggesting home loan options to potential buyers, as well as connecting them with potential lenders, assisting them with all the documentation they might need, and guiding them throughout the process. In addition, their role is to evaluate different banks depending on your personal needs and interest; and compare interest rates until finding the mortgage that better suits you.

Simply, mortgage brokers make it easier for you to get a good mortgage and negotiate with the bank during the whole process, as it sometimes can be quite cumbersome and difficult for someone who is not used to dealing with these fields.

Furthermore, there are different types of brokers. On the one hand, the ones who provide their contact telephone numbers and the client’s email address to banks. On the other hand, there are the ones who gather all the required documentation for banks.

Finally, there are brokers who do them both: provide contact between the two parts of the mortgage transaction and also gather the needed information, as well as communicate with the client and give them recommendations and advice. In Hipotecasplus we are this last type of brokers, because we offer you a 360º service.

When do brokers get trail commissions?

To start, it is important to highlight that there are two different ways to pay to a mortgage broker. The first one is called upfront commission, which is the fee that some brokers charge to customers for their services instead of earning a commission from the lender. Their role is to offer more agility to mortgage transactions, to check that the property that the applicant wants to buy has no burden that would harm him, and to apply for the mortgage on behalf of the client so that the bank wants to grant their mortgage.

The other one is the trail commission, which we have previously mentioned. However, in Spain, brokers mostly get paid by the customers, as their main goal is to protect the customer’s needs and interests before the bank’s ones.

The only occasion in which the broker will be paid by the banks is when they want to reward the broker as a customer wants to sign a mortgage thanks to their recommendation. In that case, banks can pay up to 0’50% of the mortgage loan to brokers.

5 quick tips to choose the right mortgage broker

Good mortgage brokers are the ones that have active listening with their clients, great capacity to solve problems, and that also transmit confidence. These are the three fundamental pillars on which a successful relationship between the broker and the customer will be built.

At this point, we want to tell you 5 tips you should be aware of in order to choose the best mortgage broker you can, according to your needs.

  • Price. Make sure you are okey with the price they’ll make you pay. The best way to discover it is to ask them: don’t worry, it is a normal thing to ask!
  • Service offers. Every broker offers some different services to their clients. However, not every broker offers the same ones: there will be some variations. In that case, be careful to know what you’ll need, because you’ll have to be capable to find the right broker for you.
  • Effectivity. The time a broker needs to find you a house, a mortgage, a bank and make you sign it, is crucial. So make sure you quickly find a good broker!
  • Communication. Transparency and a good communication between clients and brokers is the key for success. Do not ever trust someone who is not fully transparent with you and explains to you the situation with a real perspective.
  • Customer rating. Last but not least, to know what other previous customers think about  certain broker is always one of the most useful indicators to guide your decision. So, it is always a good idea to listen to other’s experiences and trust them! There is nothing more powerful than human knowledge!