Experience with Mortgage Broker cashbacks?

Some mortgage brokers appear to be giving part of their commissions (upfront and/or trailing) to their customers. Is this legit?

In particular, anyone had experience with this broker?

About Us - Home Loan Cash Back

 

Yes - if a broker wants to share their commission it is more money in your pocket. Some brokers will also pass through any extra incentives the banks may be offering them. No different to a company offering a cash back.

No experience with the firm highlighted but others may comment. Be worth doing a full comparison of fees vs rates vs flexibility. A lot of brokers would suggest looking at the long term financial structure you need not just short term cash back.

 

Many brokers do offer a cash back as long as certain criteria are met (for example type of structure, loan size .etc). It's really like any sales person may offer you a discount on a product or service. As brokers are paid by the bank though they offer their discount in the form of a rebate on their commission.

In essence it's a sales technique with the aim of getting new business with majority gunning for the very simple refinance. It's a pretty simple sales line when you can tell someone you'll save them money on a better interest rate and cover costs of the refi.

BUT like anything in life, is the "cheapest" or the "biggest discount/cashback" the best? And what is the ACTUAL cost of the cash back? The best brokers won't give you a cash back, y? Because their work and experience long term will likely save you a $1,000 cashback 10 times over in correct loan structuring and planning.
Cashback in any business will always win you some business but it does devalue your brand.

Take that link you provided would I give my mortgage to them because they will give me 50% trail over any broker on here? Absolutely Not!! I base the experts I use on their experience, not their offer.

Rarely if ever does the cheapest mean you save money. My 35 years on this earth have shown me quite the contrary.

 

How do discount shops make money? By selling volume.

 

There used to be a reasonable amount of this going on. Refund Home Loans used this model but ultimately they went broke.

Years ago quite a few people would ask this kind of question. How much commission will you rebate? Will you cover some of my fees?

My experience was when I did this for people, they were inevitably the ones that caused me the most grief. They're the most demanding and the biggest complainers when things get difficult. Frankly they're cheap. They're also the ones most likely to create circumstances where the lender claws back the brokers commission. This means the broker doesn't get paid at all, on top of giving away money.

Almost every time my experience was that the loan cost me money and I didn't get paid at all. In every respect I would have been better off not doing the work.

Under certain circumstances I actually do help clients financially, sometimes when I think they're getting a raw deal from the bank. But this is offered, not asked for and by that point they've already demonstrated that they're being fair in their dealings with me.

Today my policy is simple. The moment someone asks for some of my income just for the privilege of doing business with them, the discussion is over and I no longer do any work for them at all. I move on to the next person that actually values what I do for a living.

 

I do offer a refinance rebate to cover changeover costs but this is for existing customers only.

 

What is the clawback agreement like with these mass rebators

 

Thanks everyone for your feedback, some food for thought

 

My Broker takes me out to dinner, and have just recieved a $500 gift voucher for my last loan. Its all about relationships

 

If the loan has a tax deductible element there could be a tax issue with receipt of fees or a non cash benefit from the broker.

 

Great write up. And works the same in all industries, or at least should

 

Yep - I can tell the moment they ask if we match prices because ITC - The Income Tax Crapinators on the web / shopping centre have a part time unskilled, unqualified person doing the work for $99. *(T&C apply ie we will never charge anyone $99 without extras)

Imagine its same in almost every industry. And the final insult is they assume it only takes 10mins so you are overpaid / gouging / excessive v's the cheapest one they can find. WTF would I match prices for the cheapest one you can find. A race to the bottom.

They want a Tesla but want to pay for Kia.

 

Did one loan with another mob - they gave me 4k in a paper bag on settlement - not sure why no EFT. sounds dodge but I banked the money in after - no questions asked.

 

You could be assessed and found liable. Admitting to a cash deal on a public forum could invite ATO to make enquiries. Not really a great idea

 

Same in every industry, we are in domestic construction. The cheap ones who ask for a discount in the beginning always end up being the most draining, demanding clients. I simply say our pricing is fixed and we don't offer discounts as our pricing structure is already competitive and a reflection of the quality we provide! Having said that I ALWAYS ask for a discount with almost anything. Doesn't cost me anything but they probably think Im cheap lol

 

Hello everyone

I am the Managing Director of Home Loan Cash Back and thought I would make some comment on this thread given there is usually some 'opinion' around business models like ours which essentially disrupt the typical mortgage broker business model.

Firstly, I need to highlight that anyone seeking mortgage finance should be doing so through a qualified and experienced mortgage broker. Going to a bank or a broker with little experience does not always lead to quality outcomes with true choice being presented to you.

Secondly, to all our mortgage broker colleagues on this forum, our aim is not to devalue the work we all do to deliver exceptional customer outcomes. We do things differently yes, however we always respect and never be-little our fellow broker colleagues in the industry. We would expect the same from our colleagues in return.

Thirdly, having been in this industry for a long time on both the bank and mortgage broker side of the fence where relationship management was always key - we saw the broker industry being one of mortgage brokers constantly chasing their next 'lead' or 'deal'. The basic principal of the original style broker is to build up referral partners eg RE Agents, Accountants, Planners, Builders etc and obtain referrals from them ie 'leads' which they convert to sales ie 'deals'. On so many occasions, the broker will reward the 'referrer' a cut of their commissions and swap customers to each other. There is nothing wrong with this way of doing things when the customers is well serviced. What we have seen, where I could literally name hundreds of companies, is the actual mortgage broker who writes the loan and manages the relationship with a customer only receiving 50% - 80% of their commissions and the 'referrer' or owners of some of the bigger companies taking the rest. Again, there is nothing wrong with this when the customer is aware of where commissions go and the customer is well looked after.

Finally, our business model is absolutely clear and transparent. We do not deal with any form or referrer whatsoever so we receive 100% of all of the commissions we receive. The commissions, both upfront and trailing commissions, are split with our customers 50/50 for the life of the loan and the ONLY commitment the customer needs to make is to retain the loan for at least the bank claw back period which is usually 18-24 months. We do the same with life insurance, income protection, car insurance, home insurance etc.

In terms of experience and companies going under, this happens in every industry out there and is ultimately a risk of doing business with anyone in this world.

Again, all I wanted to do with this post is clear up some of the opinions and views expressed.

Everyone is entitled to an opinion and their view in life of course in this world we are living in which continually evolves through disruption and technology.

Thanks for taking the time to read and we wish you the very best in all your personal and financial endeavours

 

Nice legal boilerplate.

Bottom line: cheap isnt always good.

 

50% upfront and trail and you are paying tax on the income? I fail to see how this is sustainable

 

Everyone pays tax on income. He would only be paying tax on the net income after rebates.

 

I think this is just a race to the bottom. You get what you pay for.