Would you be happy to Pay the Mortgage Broker

@oneone
My partner and I refinanced/restructured four loans, exactly three years ago, at the time banks were reducing serviceability. It was close to impossible to get accepted and he spent a massive amount of time getting us out of a nasty business situation. Our broker's commissions and trailing fees were all declared at the time and we signed a form showing that we were made aware of this.

 

The vast majority of broker transactions by number are not going be complex and I don't see that the broker adds much value. It is always up to the customer to do their due diligence though they may not. Whilst some of the brokers here are an exception, those that I have encountered early on really didn't add any value in terms of offering choice / competition.

If it is complex, then different story and I would be happy to pay - I'm firmly in that situation now if I was restructuring.

Trailing commissions make no sense to me as a customer. Fee for service. I don't see many brokers offering fixed fees with rebate of all commissions so presume it doesn't make sense for them.

 

I agree. For my situation it was necessary, however if it was a family member with PAYG income and normal living situation, there would be no value in going to a broker. I do believe that brokers will eventually become extinct in next ten years as everything will go online and there will be no manufacturing your scenario to look good, I think it will be done through online aggregators and open banking. Now is the time to get loans if you need them I think, especially with the neo banks coming into the market.

 

In every loan we do we're required to disclose the dollar amount we get paid. Not just the percentage. And if you know the percentage, it not hard to work out the dollar value.

 

Not a bad idea, except for when the capping of the fee tips people into LMI. FHB have very little wiggle room for this, and the additional LMI for them will be significant.

 

It is nothing like choosing a property and a lot more specialist knowledge is needed than a buyers agents biased view. If a property is worth buying usually you have to act quickly and before it gets marketed or get it off the market quickly. It could take months or years to research the multitude of lenders and educate new people about your financial complexities Banks long ago sacked capable managers with cost cutting and now you have to deal with clueless people remotely. I would pay for a broker, much easier to just tell them to get it done. The most expensive loan may be the one you don't get. I have had my broker get me a 2% discount on what the bank would give me, a commercial loan for 4.37%, loans when other banks and brokers couldn't. A good broker is the key. 2k is peanuts .

 

Two thought bubbles....


If brokers save banks money (and I think they do) then banks could offer "discounted" product via brokers only. Customer pays pays broker a fee for service.

A second alternative would be for the govt to prohibit lending institutions (or related companies) from selling their products directly to customers. Although I don't think more regulation is ever a good idea.

 

Simon found a good piece within the report that helps clarify the position recommended. See thread link below. It recommends a level playing field forcing banks to charge direct customers too even if they dont use a broker.

But doesnt this recommended model then mean a regulated fee ? Or do the Big 4 act as the price maker and set a low price to kill off brokers ? Its anti-competitive when that is considered. It harms competition. I would like to see how Treasury and the ACCC address that.

Banking Royal Commission Reports & Government reponse

 

That's not correct. Brokers are required to disclose commission amounts on their credit proposals.

 

Maybe that is the new rules but I've had lots of mortgages where that was not clear. I have a recent new mortgage where my partner's accountant gets trailing commissions or the equivalent and the bank won't tell me what it is when I ask. Clear as mud.

 

Not quite that simple.

 

Lets see how many of the brokers on this site survive...the only constant is change.....banks won't have it easy for long either...there will be other disruption models.....

 

I was already thinking those who go in over last few years were suckers, if they go through with the changes, well, may as well throw away all that hard work, it is hardly worth it with current payments if things change all the time like last few years !

Where is that steven ryan guy who liked to chase media attention, also notice other brokers no longer posting, don't blame tem if they got out when APRA was meddling seemingly weekly.

 

Its been a requirement for a long time. If you read the credit proposal you provided to you by whoever wrote your loan, it should be there.

Why does your partners accountant get paid? Did your partners accountant write the loan? If so, there are two documents that should have been provided to you.

1. a credit quote - this document outlines all fees and charges the broker charges for their services. Even if that amount is ZERO ( which is typically the case) it is required that you are notified of that in writing. That document includes the brokers name, email, phone number and business address. It also includes the credit licence details of the broker - or if they are a credit representative operating under an aggregators credit licence ( also typically the case) it details the credit licencee's name, licence number, ABN, phone number and the credit reps name, credit rep number, ABN and phone number . YOU are required to sign this document and return it to your loan writer for their records, as evidence that you have been notified of these fees ( which again, are typically zero - unless your broker already charges a fee for service- which most do not)

2. a credit proposal . This document outlines the information YOU provide to your broker pertaining to income, assets, liabilities etc. It also outlines the products your broker has recommended to you, and it outlines the upfront and trailing commission payable for those products. It also requires the broker to write detailed notes about the reson for the lender and product selections. Again, YOU are required to sign and return this document to your loan writer for record keeping, prior to a loan application being submitted.

If your partners accountant - who I assume wrote the loan for you - didn't do these things...they should have. But that would seem very unusual to me, because I can assure you that across every aggregator these days, this sort of thing is audited right up the you know where.... I know multiple aggregators who have suspended brokers comms and trail at the first sign of even one I being undotted or one T being uncrossed.

is it possible you didnt read the documents thoroughly and missed the disclosure of the comms ?

 

And burns your credit score

 

Yes mate. Of course it is possible. Anything is possible but I assume you have read the RC docs.

e.g. NAB paid 100 M in introducer fees between 2013 and 2016.

Of course all the lender and introducers disclosed this ... Or did they?

 

And so they should have. brokers weren't paid that money for making snow globes. They were paid that money from writing significant home loan volumes. If NAB received billions in loan business and it cost them less than in house loan writers, and the brokers disclosed it as required, where's the issue?