Become a mortgage broker and learn how to build passive income
A mortgage broker career offers a lot of variety in the places you work, the properties you help clients buy and when you choose to do your work. It also varies in the way you earn your money. Mortgage brokers are not only paid up-front for their services, but also receive payments after the loan has been settled, called trail commissions.
What are trail commissions, and how do they help build a mortgage broker's passive income?
What are trail commissions?
Trail commissions are payments made by banks for the life of a loan. They are paid by the lender to the broker as a fee for the ongoing services provided to the borrower while their loan is still being paid. Whether it's real estate to live in or a rental property that's being purchased, lenders value highly the services brokers offer.
How do trail commissions work?
Trail commissions are different with every lender and they all pay a varying number of amounts in residual income. Like up-front commissions, trail commissions aren't paid for out of the borrower's pocket - rather, by the lenders. Each month the broker will be paid, usually somewhere in the area of one to three per cent of the property loan's outstanding value.
How do trail commissions help build passive income?
A passive income stream is one that continues to make you money even when you're not working. It's an asset that provides an income stream without the need for active attention. As the amount you're paid is a percentage of the loan balance, the larger the property loan the bigger your paycheck.
Trail commissions are an incredible opportunity for mortgage brokers to build some passive income. As the number of loans you settle in your career grows, the total value of trail commissions you earn grows with it. All of the loans you've settled - and are thereafter paid trail commissions for - are known as your book. Building your book is one of the most important things to do in a mortgage broker career, as it can give you some flexibility with regards to when you choose to work. Once your book has grown to a healthy size, you can afford to live off it without settling new loans for some time - great for people that are after more flexible working options and healthy cashflow.
For more information on becoming a mortgage broker, request a free information pack today. It has all the information you need to know.