Broker role in negotiating with existing lender

Discussion in 'Loans & Mortgage Brokers' started by LongTermOwner, 7th Feb, 2020.

Join Australia's most dynamic and respected property investment community
  1. LongTermOwner

    LongTermOwner New Member

    Joined:
    7th Feb, 2020
    Posts:
    1
    Location:
    ACT
    Do mortgage brokers sometimes become involved with negotiations with existing lenders on getting better terms on a current loan? or renewing the loan on different terms such as extension of interest only or fixed interest periods? Not sure how the broker would be remunerated other than by the borrower. Do some brokers specialise in this?
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    902
    Location:
    QLD
    Brokers can do this - they do not get paid for negotiating a better rate, only get paid if refinance or cash out, renewing the loan with a new 30 year term to extend the IO period etc..
    OR they can charge the borrower a fee for their services
     
  3. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    11,120
    Location:
    Sydney
    They can but often wont. A broker is obliged to consider all the client needs and circumstances and merely representing a client to speak to their existing lender may not meet that test and ...how do they get paid ? Many brokers will often check the existing lender first as they can throw a load of work into a application to find the client takes a lesser cut to the rate but avoids the hassles of moving. The broker then does all the work for $0 that could have been avoided.
     
    Lindsay_W likes this.
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    5,178
    Location:
    Melbourne, Nationwide
    If your loan was set up by a broker, then the broker is being paid a trail income. I'd absolutely expect them to handle this negotiation for you.

    Many brokers are happy to do this even if they didn't set up the loan. It's not a big job and it creates good vibes. If the lender offers you a lousy deal, then it's an opportunity present something better and refinance the loan.

    A good broker will also be doing this all the time and should have a good feel for what the lender will do. There's a good chance that you'll get a better result using your broker for this than by calling the bank yourself.

    For example, if you call Westpac, they'll immediately give you a 1.3% discount off their SVR. Many people are happy with this because it often represents a significant decrease from the 0.7% - 1.0% they might have previously had. What Westpac won't tell you is that 1.3% is currently their standard discount, but they'll usually go to 1.5%, sometimes quite a bit further in the right circumstances.
     
    Lindsay_W likes this.