Refinancing in short time and broker commission

Discussion in 'Loans & Mortgage Brokers' started by kanad, 23rd Sep, 2021.

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  1. kanad

    kanad Well-Known Member

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    This is a question for Mortgage Brokers in the forum.

    I recently did a refinance to Bank Of Melbourne. It took a long time to settle but there are other reasons I am unhappy with the broker.

    My plan is to turn this to an investment property in 3-6 months time and I am thinking of refinancing again to a IO loan. Are there any repercussions if I refinance again in a short time. I checked the contract I signed with broker, there is no mention of clawback and it seem they get their commissions mostly upfront. Here is what the contract I signed states.

     
  2. Terry_w

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

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    the broker will have to give back their commission
     
  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    The time to settle has little to do with the broker and a lot to do with the Bank of Melbourne. For most of the last 18 months their service has been lousy, the only reason they're generating business is the cashback.

    As of last January, brokers can't charge clawbacks.
     
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  4. kanad

    kanad Well-Known Member

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    I am not unhappy on the broker due to the time it took to settle. But this broker didn't inform me that the bank would not lend me 80% of the value. My contract with Broker was a loan of $X. They negotiated with bank a loan of $Y (less than X), got the unconditional approval and then send me news. I was in blind. They also didn't adjust the loan splits now that I am getting a lesser loan and flat out said I have to start the application from scratch if I want to change the loan splits. I didn't like this behaviour.

    But at the same time I don't want them to loose commission. I hope they get the upfront commission. I don't care about the trailing commission.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Firstly you don't have a contract with the broker for 80%. They've given you a disclosure that the loan is applying for that figure. It's not a guarantee that the bank will approve it.

    This is the other problem I have with BOM. I work the figures in their calculator but almost every time the bank disagrees with my working and the servicing is nowhere near what their own calculator suggested was possible. Granted I don't have a lot of experience with them as I refuse to use them for anything but the most vanilla deals these days, but I don't have the same issues with most other lenders. From my perspective they're unreliable at every level.

    If your loan settled less than 12 months ago, the broker will receive a clawback of all of the upfront commission they received.
     
    Last edited: 23rd Sep, 2021
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  6. Manish1

    Manish1 Active Member Business Plus Member

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    Like above, I would say time to settlement is with BOM blown out SLAs. With other reasons if you’re not informed of what loan you’ll be eligible upfront than just take a second opinion. Re. Upfront, broker looses upfront if you leave him and move to another broker or bank in short term. I would suggest, when you think of loans just think of who can achieve you goals you’re after and be upfront if the loan can’t be done. Try and get pre approval upfront so later on the loan amounts are not an issue.

     
  7. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    During that period nearly all banks were slow, it wasn't just BOM.

    If youre borrowing at a high DTI, it is a hit and miss and also it depends in the assessor.

    Maybe the assessor didn't have his coffee that morning before they picked up your app.
     
  8. Lindsay_W

    Lindsay_W Well-Known Member

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    This is the problem when people get eyes for the cashback offers.
    What was your order of priority?
    1) Turnaround time/processing time
    2) Interest Rate
    3) $4000 Cash back
    4) borrowing capacity

    I reckon turnaround time was the lowest on your list out of those 4.
    Not fair on the broker to have their income taken back because you wanted this specific product and or cashback on offer. If you refinance within the next 12 months they will get their upfront commission taken back.

    I would at least give them the chance to do the refinance to IO Investment loan.
     
  9. kanad

    kanad Well-Known Member

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    I don't want to be unfair on the broker, that is why I asked the question in the forum. I will give them the chance to convert variable PI to IO when I am ready for renting this one out.
     
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