Lion's Share Group

This program is part of our BUILD Series: Building Business 102: Gain access to our comprehensive toolkit of resources to help you build and operate a profitable business

Rate Buy Down Calculator

Understand the exact effect rate buy downs will have on your commission and what deals it will be the most profitable marketing tactic for. So you have decided to buy down the rate using your commission for a number of different reasons. So how to you protect your income? The best way to protect your income is to be able to compare the entire buy down criteria with every lender, and assuming the mortgage terms and conditions meet your entire client’s needs and are equal, to maximizing your income. But who has time to compare every lender’s buy down policy? Remember, buying down the rate on a mortgage and how much it is going to impact your commission is based on all of the following criteria:

• Allowed or Not: Some lenders don’t allow a buy down using your commission at all
• Term in Years: Some lenders only allow buy downs on certain mortgage terms
• Mortgage Product: Fixed or variable? Some lenders don’t allow buy downs on variable rate mortgages and/or their calculation is different. It may cost you more to buy down a variable versus a fixed due to the cost of funds and spreads to the lender
• Product Specials & Features: Lenders often have mortgages with reduced features such as reduced pre-payment, quick close specials, increased penalties on full repayment prior to the end of the term, and more
• Amortization: this is used to calculate how much it is going to cost you. With some lenders the longer the amortization the more it costs you to buy down the rate
• Mortgage Amount: The actual mortgage amount won’t impact how the buy down is calculated but it will impact the end result – the larger the mortgage the more commission you will earn no matter the buy down calculation used by the lender
• Finder’s Fee: How much in finder’s fee is being paid on the specific term and product by the lender? It can often differ dramatically based on term and product for each lender
• Volume Bonus: How much in volume bonus, if any, is being paid to you - some lenders don’t pay volume bonuses at all and/or on specific products. It can differ dramatically for each lender based on volume funded with that lender and negotiations with your brokerage
• Efficiency Bonus: How much in efficiency bonus, if any, is being paid to you - some lenders don’t pay efficiency bonuses at all and/or on specific products. It can differ dramatically for each lender based on volume funded and closing ratios with that lender and negotiations with your brokerage
• Extra Bonus and Credits: How much in extra credits like marketing dollars or bonuses, if any, is being paid to you - some lenders don’t pay extra bonuses or credits at all and/or on specific products. It can differ dramatically for each lender based on volume funded, closing ratios and other factors with that lender and negotiations with your brokerage
• Lender’s Current Best Rate: Each buy down calculation is based on the difference between the lender’s current best rate on the product and term you have selected versus the rate needed for your client. Because rates can be different from one lender to another, this changes exactly how much it is going to cost you
• Buy Down %: This refers to the difference in the lenders current best rate and the rate your client needs. For example, the lenders current best rate is 2.79% and you want 2.59% for your client so the buy down % is 0.20%
• Buy Down % Maximum: Some lenders have a maximum that they will allow you to buy down the rate by. If your buy down % is higher than their maximum, then you are not allowed to buy it down any further than their maximum
• Formula for Buy Down Cost: Each lender has their own formula on how they calculate the actual amount of commission you are going to have to give up to buy down the rate. Their calculations can also change and often based on demand, cost of funds, interest spreads and yields. Here is a breakdown of the two most common formulas used:
  • A specific amount of bps in commission per 0.01% or 0.05% of rate buy down
  • An on-line calculator that uses a factor based on product, term and amortization to calculate the buy down cost
• Cost of the Buy Down: This refers to the actual dollar amount of commission you are giving up to buy down the rate. For example, a 0.10% drop in rate on a 5 year fixed term with a 20 bps commission cost per 0.05% rate drop formula with the lender will cost you $800 on a $200,000 mortgage with a 25 year amortization.

Confused? Tired of trying to figure all this out yourself? Then watch the demo below to get a first glance view of this time saving, income protecting invaluable tool top mortgage brokers can’t do without.

Program Components

Training Modules: Comprehensive training modules that will walk you through all elements of the program while providing invaluable information and insight and narrated by a top producing mortgage broker. Learn how to implement, use and maximise results with differentiating techniques. These training modules go above and beyond just reading the content of the workbook that you will receive - they explain in detail how to maximise the use and results of this Program in your business.

Templates: Includes a number of documents (templates, scripts, calculators and/or tools) for you to download to help you get started in your mortgage business. Point and Click easy to use soft copy templates to maximise your business growth and deliver value to your clients - no reinventing the wheel required - no technical experience required. You will find these templates listed under the specific Training Module they belong too and just click to download. While your Program is still active on line (expires after 365 days) or your VIP Membership is in good standing, updates to these templates will happen automatically and you will be advised by email so that you can download the updated version.

Workbook: The workbook his a step by step guide to learning, understanding, and implementing the program content. A guide that will be used over and over again - while initially learning the program and then for future reference. Start to build your library of knowledge and experience. Refer to this workbook while you are watching the training modules.

Updates and Upgrades to the Program:  When you purchase our programs you have access to any and all updates for a 365 day period. You will receive updates to these any templates as well as program upgrades automatically. This membership also gives you access to our Bank of Canada template to send out to your database for all the fixed announcement dates, attendance and recordings of our member’s only webinars, and 30 minutes of free coaching per year with Chief Education Officer - Claire Drage - a top performing mortgage broker and trainer in the industry. After 365 days of purchase you will be required to pay $99/year to keep your membership in good standing.  

REMINDER, APPROVED USE AND COPYRIGHT INFRINGEMENT: Please remember that you have purchased the right to use this program, its training modules and templates. Do not distribute to anyone other than your own staff and assistants to be used on your own mortgage clients ONLY. It is forbidden to sell or distribute without permission from The Lion's Share Group Inc as per the Terms and Conditions agreed upon when you ordered this program.