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20 Meg Dr
London, ON, N6E 2X9
Canada

519-649-2834

We have been proudly serving the mortgage and financial needs of individuals in London, Ontario and all across Canada for more than a decade.

Our Blog

Welcome to Our Blog, where you'll find the latest news and gain insight into a variety of mortgage-related topics.

When Commission Doesn't Matter: The Long Term Effects of Doing The Right Thing

Mike De Sousa

It is well known to the world that Mortgage Brokers get paid a commission once a mortgage closes and funds with the chosen lender.  Most brokers get anywhere from 0.60%-1% based on the balanced that is borrowed, not the interest rate!*

The year was 2008, and we had just come off a record year with gross sales worth six digits!  This growth happened because of our commitment to our customers, our strategies and the general growth of the real estate market.  Midway through 2008, we took a look at our gross sales revenue and noticed it was off about 40% from 2007, yet we were transacting just as many mortgage units as we did the year before.  Something didn’t make sense.

After taking some time to review statistics (which is painful for me.  I’d much rather work on improving the customer experience than tracking numbers), we realized that we were doing a lot of “port mortgages”.  This means that when a client decides to move or refinance their mortgage, the lender will allow the customer to apply to increase the existing contract instead of breaking it and paying a penalty. (Note that brokers and bankers get paid based on “new” business which means breaking and paying the penalty helps their bottom line)

One of our top 5 values we work towards is honesty, so naturally we’d analyze and calculate which option is better for each customer:  Break the mortgage or port the mortgage.

It turned out that 40% of our transactions involved “ports”, meaning that we saved our customers from paying penalties because it was to their advantage.  The downside for us was that “ports” only pay a small commission on the increased amount, barely covering our operating costs on that deal to deliver exceptional service.

When we look back at what happened and how it impacted our revenue that year, we don’t regret it one bit!  In fact, we’re proud that our revenues were down because we know we did the right thing for each and every customer.  Our customers rave about our service and even when we “mix” something up every now and again, our customers trust that we’ll make it right and exceed their expectations.  Our surveys prove that we are doing the right things.

So when industry sales reps come and tell us that they pay among the highest commissions in the industry, we ask about their porting options instead.  We ask them if they meet The Four Star Lending Program™ standards that we have developed to ensure our customers deal with quality lenders.  We grill them on their customer service, and we demand that they work for the customer.  Never mind our commission; let’s ensure you get the most exceptional experience so that you can tell everyone you know about what we strive to do!

Thanks for reading!

Mike De Sousa and Mindy Small

Your London, Ontario Mortgage Brokers at Dominion Lending Centres Forest City Funding FSCO# 10671

 



*(Except for one lender who allows brokers to benefit from charging a higher rate on an unsuspecting client and use the points to benefit another customer who is a bit more savvy).