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Broker's commission on home loans

Discussion in 'Property Finance' started by alvaro86, 3rd Jan, 2017.

  1. alvaro86

    alvaro86 Member

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    Hi All,

    Just have a few questions that has been on my mind for a while.

    Do broker's still receive their initial 0.62% commission if say the loan settled on residential home loans, but the mortgage was discharged say a month or 2 after settlement? I understand broker's receive their trailer fee for life every 6ish month or thereabouts.

    Obviously this may depend upon the bank, but say for CBA or ANZ Bank?

    Thanks all.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes they will receive it, but be required to pay it back in full if the loan is paid out in less than 12 to 18 months.
     
  3. alvaro86

    alvaro86 Member

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    Not that is my problem, but that is a bit slack considering if someone discharges it after even 6 months, it is not the broker's fault they discharged it? They still did all the work for the loan to go through.

    Do you know if this is say for all banks?

    Thanks Terry.
     
    Terry_w likes this.
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Nearly all.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Many brokers will build into their client agreement that the client will compensate them if this occurs.

    If you think you'd be discharging the mortgage within 2 years, talk to the broker about it. There are lenders that are competitive that don't have clawbacks. There are ways to turn this into a win-win.
     
    JacM likes this.
  6. Sonamic

    Sonamic Well-Known Member

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    Claw backs are nasty.

    How common are they post APRA? Are more people tending to stick with what they have for longer?
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes it is pretty slack! I had one where the client decided to sell a property almost 12 months in it discharged and I had to pay back all the comms.

    Now it is harder to refinance so clients are less likely to move, but a few people are selling and cashing in on the boom in values.
     
  8. euro73

    euro73 Well-Known Member Business Member

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    I have a fee of $1000 if I secure a client a loan and they don't proceed. This is not a fee to make an application. It is only payable if a loan is approved unconditionally and they do not proceed.

    I also have clawback provisions clearly detailed in my client agreements.

    No one likes charging a client a fee, but loans are time consuming and my knowledge and expertise has been developed over a long time, and I should be paid for my time and knowledge, like anyone else is. No one else works for free - not planners, not accountants, not conveyancers or solicitors, and not any of my clients in their day jobs.
     
  9. Mortgage Capital Australia

    Mortgage Capital Australia Mortgage Broker & Brisbane Buyers Agent Business Member

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    Had a forum client refinance in December 4 days before the end of the 18 months.

    They went directly to a lender to save 25 bps who subsequently has increased the rate by 15 bps. Great saving.

    50% clawback not nice that time of year on a decent sized loan so we definitely incorporate a clawback fee in on our new loans.
     
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  10. RetireRich101

    RetireRich101 Well-Known Member

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    1. discharge, meaning refinance and/or selling the property?
    2. what happens to a construction loan, when you decide to sell upon completion (less than 12months), hence discharging?
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    discharging means paying out the loan completely. It applies to construction loans too.
     
  12. EN710

    EN710 Well-Known Member Premium Member

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    Hmm, what if someone in the acquisition phase revalue and refinance with the same broker within the clawback period?
     
  13. Mortgage Capital Australia

    Mortgage Capital Australia Mortgage Broker & Brisbane Buyers Agent Business Member

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    Assuming they refinance with a new lender they get clawback on one hand for the original loan and paid a new upfront on the other.
     
    Last edited: 3rd Jan, 2017
  14. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    This can also be done with no clawback by just creating a new loan for the equity release - there's no need to trigger a clawback in this instance if the client is happy to stay at the same bank.
     
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  15. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    If it's with the same bank they'll get paid a small commission from the top up.

    If it's with a different bank - they'll get a clawback and will get paid a new commission from the new lender.

    Cheers

    Jamie
     
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  16. albanga

    albanga Well-Known Member

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    For the brokers that do chrge a fee for discharged loans, how do you get the client to pay this?

    Say 14 months rolls by and the ex client unknowingly goes into a bank and refinances and then you get stung with a 5k clawback.

    Is it just a simple email with perhaps the signed Agreement attached to the form and your bank details?

    Has this happened to anyone and how did the client react?
     
  17. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes
     
  18. lixas4

    lixas4 Active Member

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    Hi, what is CBA's clawback period? I am thinking about refinancing for development with a new broker (from this forum). But dont want to do the wrong thing by my old broker.
     
  19. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Depends on the aggregator - 18 months generally
     
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  20. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    18 months from memory.
     
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