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Changing brokers

Discussion in 'Property Finance' started by beachgurl, 5th Aug, 2015.

  1. beachgurl

    beachgurl Well-Known Member

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    I've just had an awful experience with a broker to purchase a property which has just settled. I now require a construction loan to build a house or two on it.

    Can I appoint a different broker to work on the construction loan and if so, do I have to pay the original broker a clawback? I intend to keep the current loan product and just add to it for the construction/subdivision.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes
    Not unless you agreed to. Broker wont get a claw back inless you move banks.
     
  3. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Thats actually not true - it can be something dumb like chaging an SVR to a LOC with the same bank.
     
  4. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    You should be able to use anyone for the construction loan. If they gave you bad service then clawbacks are the least of your concern so long as you didnt agree to a clawback repayment within X years.

    I went through a couple of brokers before I found an excellent one, I can personally recommend @Corey Batt if you need someone new.
     
    beachgurl likes this.
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Ah yes. An internal refinance could trigger a clawback
     
  6. Watson1

    Watson1 Well-Known Member

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    yep requesting to close the loan and resetting the term to 30 years or anything which changes the account number generally triggers clawback.

    Had a branch pull this trick on me when a customer went in for an 8k top up. Customer didnt want to bother me...
     
  7. beachgurl

    beachgurl Well-Known Member

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    Thanks for your replies. sounds like there is no straight answer. Yes I did have to sign a clawback provision in the contract.
     
  8. Wandercro

    Wandercro Active Member

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    What's a clawback?
     
  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Clawback provisions do vary from one lender to another, but most lenders wouldn't issue a clawback for an internal refinance, given they don't pay the new broker for it either.

    @Wandercro a clawback is when you close or move a loan within 2 years, the bank take back part or all of the brokers upfront commissions.
     
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  10. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If she doesn't want to refinance the land loan she'll have to stay with current lender for the construction.

    That said you can definitely use a different broker for the construction portion without affecting anything.
     
  11. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    The real sticking point will be if said constructions are completed prior to clawback periods expire, meaning you *could* face a situation where you have to choose between accessing any potential equity, or waiting it out to avoid any costs.

    All manageable, but a frustration nonethless - I'm not a fan of clawback provisions for the most of it.
     
  12. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Thats what I meant - any broker can write the construction portion with the same lender. You would assume the existing broker checked servicing on the overall loan value prior to putting it to a particular lender...
     
  13. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    You'd certainly hope so!! :eek: That said, so much has changed recently that what did service may not anymore.
     
  14. Marty McDonald

    Marty McDonald Mortgage broker

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    DaveM, I am glad you find Corey so helpful. You do seem to mention it regularly that it took you a while to find the right broker so I'm curious what was the reasons the other brokers were no good? As a 14 year veteran I can say sometimes from the brokers perspective things just don't work out as planned and sometimes it is out of the control of the broker, like an auto decline due to failing credit score or a low valuation for example. Sometimes it's the clients asking for things that don't match their asset position and incomes ...like a 97% investment loan for example. Sometimes it's just not a good philosophical or ethical match.

    But back to the original post it shouldn't matter who does the construction loan as long as the land loan stays the same.
     
  15. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hi Beachgurl

    You can change brokers.

    In terms of clawbacks - it's only triggered if the current loan account is closed down and with construction loans, it's generally a second loan (not a top up, etc on the land).

    Just share your concerns with your new broker - explain that you don't want anything to be done with the other loan if possible (they shouldn't have to touch it anyway).

    Cheers

    Jamie
     
  16. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Shame you had a bad experience.

    Just out of interest–if I'm not prying–how'd you find your current broker? I always wonder the path that leads people to end up in bad hands.
     
  17. Redom

    Redom Mortgage Broker Business Member

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    Sorry to hear about your experience beachgurl - hopefully you can walk away without too many bruises to your overall goals.

    In this situation, i'd:

    1. Tell your current broker privately about your unpleasant experience, and mention that your leaving. Its quite possible if they haven't matched your service expectation, they'd waive any potential clawback anyway. An operator should be able to cop that on the chin and walk on - i'd suspect the value of their reputation is worth a whole lot more to them than one clawback. You need thick skin in the broking business and they'd likely be better for it.

    2. Ask the new broker to set up the construction loan to avoid potential clawbacks anyway. Trail will likely tick over to the new broker, but the upfront for the land should

    I wouldn't go as far to say an unpleasant experience necessarily means the broker is bad/shoking/needs to be thrown under a bus.

    Anyone thats written as many loans as Marty would likely appreciate that. Express your concerns and let them react to it. On a separate note to OP - I'm sure that the biggest and best brokers here have lost clients and lose clients - any medium to large operator would. They keep much more than they lose and hence they've got very successful businesses and well earned reputations. When you run an operation with a handful of staff and submit 300+ deals a year, there'll be a couple that aren't wow'd.

    Cheers,
    Redom
     
    Last edited: 5th Aug, 2015
  18. ziwnoyeb

    ziwnoyeb Member

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    about changing brokers.. I just did a refinance with a new bank/broker.. will the old broker know that I have switched bank? for e.g. trailing commissions stopped etc.?
     
  19. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Yes, his trail will stop.
     
  20. ziwnoyeb

    ziwnoyeb Member

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    ok.. so the bank will tell him that (XXXX->my name) has switched bank and his trailing commission of $xx.xx will stop? I mean the broker has so many customers in his books, how will he know it's me not someone else has quit?