How to get a principal broker licence in Ontario

Are you passionate about guiding your clients but also enjoy leading a team and helping other mortgage brokers succeed? If so, getting a principal broker licence might be your next big career move. This will allow you to lead a mortgage brokerage especially in terms of compliance with the rules and regulations set by the law. 

But how do you get this licence? What are the steps? 

In this article, Canadian Mortgage Professional will explain everything you need to know about getting a principal broker licence in Ontario. We will first walk you through what a principal broker is and discuss how to become one. Want to know why having a principal broker licence holder is important for mortgage brokerages? Read on to find out. 

What is a principal broker? 

A principal broker is a person designated by a mortgage brokerage to be its chief compliance officer. They are in charge of ensuring that the mortgage brokerage follows all the regulations and requirements stated in the Mortgage Brokerages, Lenders, and Administrators Act of 2006. 

They also perform the following responsibilities: 

• reviewing the mortgage brokerage’s policies and procedures to make sure that it follows the law 
• ensuring that mortgage brokers and mortgage agents are adequately supervised 
• signing and approving any trust account reconciliation statements prepared by the mortgage brokerage to confirm that they are accurate 

In Ontario, every mortgage brokerage must have one principal broker. If you want to own and operate a mortgage brokerage in this Canadian province, you can either: 

• employ one principal broker 
• become the mortgage brokerage’s principal broker by getting a principal broker licence 

How to become a principal broker in Ontario 

If you want to become a principal broker in Ontario, you must get a principal broker licence. To get that, you should already be working as a licensed mortgage broker. 

Here are the three steps on how to become a principal broker in Ontario: 

1. apply to become a mortgage agent level 1 
2. upgrade your licence to work as a mortgage agent level 2 
3. level up and become a mortgage broker in Ontario 

These three all require certain qualifications such as: 

• age limit 
• residency 
• educational qualifications (if applicable) 
• suitability requirements (if applicable) 

Let's briefly discuss each step below: 

1. Apply to become a mortgage agent level 1 

Ontario follows a tiered system in becoming a principal broker. The first step is to get your mortgage agent level 1 licence. Make sure that you pass all the requirements set by the Financial Services Regulatory Authority of Ontario (FSRA). You must also finish the FSRA-approved mortgage agent level 1 education program before you can get your level 1 licence. 

When you start working as a mortgage agent, you can choose to work full-time or part-time. Remember, managing your time wisely is key to success. If you aren’t convinced, check out this video: 

In Ontario, some say that becoming a mortgage agent is too easy. Read this if you’re curious about raising the standards in the mortgage agent profession. 

2. Upgrade your licence to work as a mortgage agent level 2 

The next step is to upgrade your level 1 licence to level 2. To work as a mortgage agent level 2 in Ontario, you must also complete all the qualifications set by the FSRA. Once you get this licence, work your way up until you can apply to become a mortgage broker. 

3. Level up and become a mortgage broker in Ontario 

To get a licence and work as a mortgage broker in Ontario, you must have been licensed as a mortgage agent level 2 for at least 24 months in the past 36 months. Only then can you apply to the FSRA. After completing the requirements, the FSRA will upgrade your mortgage agent level 2 licence to a mortgage broker licence. 

To learn more about becoming a mortgage broker in Canada, watch this: 

Want to dive deeper on how to become a mortgage broker in Canada? Check out this guide. 

Eligibility criteria in getting a principal broker licence 

When you’re finally working as a licensed mortgage broker, you can now apply to get a principal broker licence. Make sure that you are authorized by the mortgage brokerage to deal or trade in mortgages on its behalf. Here are the conditions that you must meet if you want to get a principal broker licence: 

• if the mortgage brokerage is a corporation, you must be a director or officer of the corporation 

• if the mortgage brokerage is a partnership (other than a limited partnership), you must be a partner 

• if the mortgage brokerage is a limited partnership, you must be a general partner, or a director, or officer of a corporation that is a general partner 

• if the mortgage brokerage is a sole proprietorship, you must be the owner or sole proprietor 

Principal broker licence holders are needed by mortgage brokerages 

In Ontario, every mortgage brokerage must have a principal broker. This is under the Mortgage Brokerages, Lenders, and Administrators Act of 2006. 

However, it is also an important part of making sure the mortgage brokerage runs smoothly while complying with the rules and regulations stated in the law. Here are other reasons why we can say that principal brokers are needed by mortgage brokerages: 

1. monitors the mortgage brokerage’s compliance with the law 
2. protects clients and the mortgage brokerage 
3. provides supervision and support 
4. builds trust with clients and mortgage lenders 
5. required by law 

Let’s take a closer look at them below: 

1. Monitors the mortgage brokerage’s compliance with the law 

The principal broker is responsible for ensuring that everyone in the mortgage brokerage complies with the law. They oversee the mortgage agents and mortgage brokers, making sure that they are doing their jobs properly and legally. 

All mortgage professionals under the mortgage brokerage must be authorized to deal or trade in property loans on behalf of the latter. It is the principal broker’s job to take measures and verify this.  

2. Protects clients and the mortgage brokerage 

Having a licensed principal broker helps protect clients from mistakes, fraud, or unlawful advice. This also safeguards the mortgage brokerage from getting into legal trouble. 

The mortgage brokerage’s dealings and transactions must be lawful. So, if needed, the principal broker can recommend changes to its policies and procedures. 

3. Provides supervision and support 

Mortgage agents and mortgage brokers working under a mortgage brokerage need guidance and supervision. The principal broker is there to train and answer questions regarding the law, checking if they understand the rules. 

Without a principal broker, the mortgage professionals working under the mortgage brokerage might make mistakes that could harm clients or the business. 

4. Builds trust with clients and mortgage lenders 

When a mortgage brokerage has a licensed principal broker, clients and mortgage lenders will trust the business more. It shows that the mortgage brokerage takes its responsibilities seriously. It also builds the firm’s credibility as this can guarantee that it follows all legal and ethical standards. 

5. Required by law 

Finally, the law specifically requires every mortgage brokerage to have a licensed principal broker. Without one, a mortgage brokerage cannot legally operate. 

Benefits of getting a principal broker licence 

Working as a principal broker is about more than just having a title—it’s about choosing what’s best for your career and future. When you get your principal broker licence, you open the door to many new opportunities. Here are some of its benefits: 

Higher earning potential 

As a principal broker, you can earn more money due to your upgraded licence. If you choose to build your own business, you can hire other mortgage agents and mortgage brokers to work under you. This means that you can earn a share of their deals as well. 

Establishing your professional credibility 

Becoming a principal broker shows that you have the experience, knowledge, and skills to lead a mortgage brokerage. This enhances your credibility and reputation in the industry. People are drawn to trust and work with well-established individuals. You might even see your name with the top mortgage brokers in Canada one day. 

Personal satisfaction 

As a principal broker, you can be a mentor to new mortgage professionals. You can share your knowledge and help them grow their careers. You also have the chance to create a successful team. 

Watching others succeed under your leadership can be rewarding. Imagine getting to see others thrive because of your guidance and support. 

Is becoming a principal broker in Ontario worth it? 

Getting a principal broker licence will not just open doors to higher income and professional growth. It will also provide you with the authority and credibility to become a leader. 

That’s why if you’re serious about advancing in the mortgage sector, becoming a principal broker in Ontario can be a smart move. And while it does come with more responsibility, it also brings greater opportunities for success. 

Do you have experience in getting a principal broker licence? You can share your insights in the comments below.