The mortgage manager’s role is to collect interest from the borrower and distribute it to the lenders. There is no need for a mortgage manager if:

  1. the mortgage requires prepaid interest for the term;

  2. the lender provides their bank account details to the borrower in the epitome of mortgage;

  3. a mortgage syndicate requires the borrower to break up the monthly interest payments and pay them to each lender separately.

The usual fee for the role is 0.5% of the principal per annum. This may be negotiated up (if there are a large number of contributors) or down if the principal amount is over $2M.

Sometimes the role of mortgage manager and administrative agent will be combined. All you need is a dedicated bank account and a bookkeeper prepared to check the account daily for payments. The account balance stays low because it is only used for interest (never capital) and the money is only in transit (it enters and leaves your account on the same day).

Bransgroves Lawyers, through an affiliated company, provide mortgage management services for loans where we acted on the advance if requested.

You need to be a systems and procedures sort of person to take this on because if you are paid the interest and delay in remitting it to the lenders it will cause resentment. If you delay more than 7 days the lenders may expect you to pay them the higher rate.

Collecting and distributing interest, and preparing reports for a lender, is a good way to win their loyalty and effectively convert them into your