A side of insurance
Creditor life insurance policies for mortgages are another tool brokers can use to expand their business, and it doesn't require further licensing to offer these policies. When a deal is closing, brokers can explain the benefits of having the optional insurance (which can supplement a current life insurance plan), provide clients with a quote and, if they're interested, have them fill out a short application to send to the particular company they're working with.
Feisal Panjwani, a broker with Invis in Vancouver, says he has recently made a more concerted effort to sell life insurance policies because he has seen the value of the protection, particularly for younger borrowers with larger mortgages. Panjwani offers the insurance through a program Great-West Life has with Invis.
"I'm finding a lot of clients will double up on the insurance - they'll take our insurance that is tied to the mortgage in addition to their own life insurance," he says, estimating about 35 per cent of his clients opt in. "If one of the homeowners were to pass away, the balance of the mortgage would be paid in full."
The main policy Panjwani offers clients is insurance on the declining balance of their mortgage, which he points out is portable from lender to lender and is relatively cheap (around $30 a month). If clients don't want to pay a monthly insurance premium on the full mortgage, they can opt to insure half or three quarters of the balance instead.
While Panjwani says he can make upwards of $1,500 a month in commission from life insurance referrals, the main benefit to him is being able to create another connection to clients.
"I think it's important for us to be the ones to offer that insurance to the borrower rather than an independent third party," he says, adding, "With all the extra competition out there from the banks and the bank reps, and with the influx of new brokers getting into the business, it's really important to have as many ties to the client as you possibly can." Brandon Antonini, a mortgage planner at Mortgage Architects in Calgary, also says that selling insurance alongside mortgages is about more than the extra commission. He sells policies related to mortgages through Mortgage Protection Plan (MPP), which is partnered with Mortgage Architects.
"For me, it's about providing more information and having a better-informed consumer when they leave my office," says Antonini, who estimates that about 25 per cent of his clients will take the MPP policy. "If I'm the person that gives them a potential solution to a question about insurance, that differentiates me and it's just one more step in being a one-stop shop for mortgage solutions."
New designations
Commercial mortgage deals translate into bigger commissions - and sometimes more status - for brokers. But getting into the commercial side of mortgages can be difficult because it's a longer and more complex process than putting together residential deals.
Clarence Wedge, a commercial mortgage broker based in Pickering, Ont., recommends designations offered by the Real Estate Institute of Canada (REIC) to residential brokers who want to diversify into the commercial field. Wedge teaches courses at REIC for the CRF (Certified in the Real Estate Financing) designation and also points to the CRU (Certified Real Estate Underwriting) designation as useful education for mortgage brokers.
"I teach them the basics of commercial mortgages and also what the lender is looking for and tips on what lenders do what types of financing," says Wedge, adding that ethics and hands-on training are also a big part of the courses. "The lender will understand that a broker with a CRF designation will have formal training in underwriting commercial transactions."
The CRF is open to brokers who have been in the finance business for a year or more and who spend more then 50 per cent of their working day working in the area of real estate finance. It generally takes about two years to complete all the courses, says Wedge.
Another way to learn the commercial side of things is finding an experienced broker to co-broker deals with says Dale Bilton, a commercial broker with Mortgage Intelligence and last year's commercial broker of the year at the Canadian Mortgage Awards. He points out that doing commercial deals is not an easy thing to learn due to things like the differences in types of properties (i.e. apartment buildings versus hotels) and because lenders have less straightforward financing guidelines for commercial deals.
"My advice would be to co-broker commercial deals with someone who you know and trust, especially for deals like hotels and industrial buildings, which you don't get every day," says Bilton.
Other designations that could help mortgage brokers expand their business are the CRP (Certified Reserve Planner) designation through REIC, which would qualify them to perform reserve fund planning services for condo developers or public property companies, and the ARM, accredited residential manager, which could be useful for brokers who service real estate investors.
Facilitating leasing equipment deals, selling life insurance or writing commercial mortgages are just some of the ways brokers can look at expanding their business, particularly if they're newer to the industry or want an additional revenue stream to help get through slower periods in the market. Of course, brokers have to evaluate how many extra services they want to take on and make sure that their core mortgage business doesn't suffer.
For Tiffany Clark, equipment leasing has helped her apply her past work experience and build another profit stream while at the same time building her mortgage business - something she is still new at. She has also found leasing to be an exciting new venture that suits her needs and interests.
"Every broker I've met builds their business differently," she says. "For me, in a way, I hope my business grows more on the leasing side because I really enjoy it."
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