Broker's commission on home loans

Discussion in 'Loans & Mortgage Brokers' started by alvaro86, 3rd Jan, 2017.

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  1. thydzik

    thydzik Well-Known Member

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    Do brokers have any power to renegotiate rates with a lender within the 18month period, given they know you won't leave due to clawback?
     
  2. Morgs

    Morgs Well-Known Member Business Member

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    Revenue - yes
    Profit - no
    As outlined by @Rolf Latham need to take into account fixed overheads & time costs
    Settling 4-5 loans a week would be highly transactional and need more than one broker/staff to keep up with the admin
     
  3. Morgs

    Morgs Well-Known Member Business Member

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    Yes

    If you have a broker originated loan - always talk to them first
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    The calculation is correct. Brokers are paid between 0.5% and 0.6% upfront commission. It's even worse when you consider that most brokers put the cost of a setting up a loan at somewhere between $1200 and $1500 - before being paid for their time, which is on average about 10 hours.

    It's not all bad news. Brokers are paid a trail commission, in most cases 0.15% per annum. This helps make a business profitable and also covers the costs of answering ongoing questions, processing increases and variations.

    What this means is brokers make almost no money in the first few years of their career, but if they are successful, it is possible to do well in the long term.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I've been doing a lot of that recently.
     
  6. Harry30

    Harry30 Well-Known Member

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    What is the situation for a large commercial loan for a CIP. Let’s say $5m. These are far more complex and time consuming, and for deal much more likely to fall over for some reason. What is the standard arrangement? BTW, for these, I am more than happy to pay upfront, including having a success fee kicker to the broker who closes (in addition to keeping whatever fee they receive from the bank).
     
  7. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Usually brokers will charge a mandate for that kind of thing. You sound like a dream client - but as you'd know, when finance is hard to find, people don't mind paying if the deal is worth it to them.
     
  8. Harry30

    Harry30 Well-Known Member

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    I must say I am more than happy to pay for brokers. Banks were good when my affairs were simple, but any complexity will generally mean you crash and burn through the normal bank processes. That is my experience anyway. I should tell you a little story. My bank even appointed a private #anker to look after me and try and massage my ego. Little did they know I am cheap and don’t get swayed by all that (I tell bellboys in 5 star hotels to clean out the bar fridge so I can fill it up with my own grog I buy cut price across the road). Anyway, back to the story. The Private #anker was a complete loser. Utterly useless. Couldn’t tell the difference between a debit and credit. At school, his addition was probably ok, but quite frankly struggled with the long division. After being utterly fed up with things, I decided to change banks and go with a different bank. Now, this was the time for my private #anker to shine. He asked me what rate I was getting. I told him. His response: ‘Oooo’. Yep, that was it. So I left. But the story gets better. In the final stages, the bank (I was leaving) was dragging its feet on the paperwork (great rate with new Bank was only available for short period). So, I thought, I better ring up my private #anker. I phoned him and said, move things along. You know what, he finally managed to do a middling to fair job. In the end, he was useful for something. This guy was able to push things along and process the paperwork so I could leave them all behind. He has not spoken to me since. I think he took it personally. That is the reason why I am happy to pay.
     
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  9. beachgurl

    beachgurl Well-Known Member

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    I state my clawback in the Credit Quote document. I've only had to enforce it once so far.
     
  10. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I've never bothered with clawback provisions or with fees for not proceeding with the loan. They're not a significant problem for me and I really don't care for the negativity around the whole thing.
     
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  11. Frank M

    Frank M Well-Known Member

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    did you enforce for the whole amount or a percentage of the clawback if you dont mind me asking, thanks
     
  12. beachgurl

    beachgurl Well-Known Member

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    I enforced the full amount as the loan was discharged 6 months after the loan was written.
     
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  13. Frank M

    Frank M Well-Known Member

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    Thanks for the reply, Thats fair
     
  14. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I would imagine that most brokers would recover the amount that was clawed back. It's fairly easy to demonstrate what that amount is.
     
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  15. Peppas

    Peppas Well-Known Member

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    So I found no clawback fees in anything that I signed and now the broker is trying to charge me some - is there somewhere I can take this to, or do I just get my solicitor onto it?

    In essence they are wanting to charge me for their hours spent. I'm not saying this is unreasonable but I was not happy with the service and the loan product I had to sign off on due to looming settlement, hence me refinancing to a different lender before 12 months were up. Thanks in advance.
     
  16. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Ask them on what legal basis are they wanting to charge you. I would like to charge you for reading your post, but that doesn't mean you are obliged to pay me. We have no contract in relation to this.
     
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  17. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Legally, unless you signed a quote prior to submission, he can't charge you claw-back fees. Ask him to show you the document you signed that allows him to charge you, and if he can't, you're free to go.
     
  18. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    There also may be remedies under consumer law to suggest there is a right for the clawback to be recovered if it wasnt mentioned or agreed to. The action by the broker may be unconscionable conduct or misleading and deceptive conduct

    For example if the client has borrowed direct from a bank no clawback would have occurred. But for using a mortgage broker the issue ONLY occurs when a broker is involved. So was adequate disclosure given of the financial penalty that the broker (and not the lender) will impose. ? A dangeous approach to chase people for costs they dont agree to. The ACCC could step in and it could get nasty for a credit license
     
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  19. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    It is very clear in the NCCP act that if a broker charges a fee it must be disclosed upfront to the borrower.

    Firstly in the Credit Guide - which must be given by the broker as soon as it becomes apparent that they may be assisting you with credit.

    Then - in a quote document - which outline the credit contract details and their fees.

    If you didn't get either of these documents then they have no case to charge you.
     
  20. Ruby Tuesday

    Ruby Tuesday Well-Known Member

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    Broker wants to charge me 10K to do refinance, because he says he is worried he wont get paid if the loan does not gets drawn down, even though most of will loan be, previously this hasnt been a problem as I would just transfer funds to another account than transfer them back and broker gets paid . Will the broker still get commissions or will I a get a slightly lower rate as commissions wont be paid by bank?