Why use a mortgage Broker?

Creative Canberran, I totally agree with you. I believe that if a client has a good accountant, financial planner and/ or a lawyer then they are in a position to make well informed and educated choices. This is the advice I would give any client. Buying a home or investment property is one of the biggest investment most people will make.

It should be taken seriously and be well researched

I would like to point out two things.
Firstly, commissions are everywhere. Where someone claims not to work on commission, it’s likely they still work on spivs (target bonuses). Sometimes, people receive both. This goes for anyone who sells anything. So long as there is an admission of this, I don’t see a problem.

I would however caution people to always retain a 3rd party for advice. A mortgage broker is providing a commercial service and regardless of claims is working for the good of their business. Having a lawyer or financial advisor separate to the broker would always be advisable, particularly in assessing any contract with the bank for which a mortgage broker is legally bound not to offer legal advice on.

Hey Jazz. I appreciate the dialogue and the feedback. I understand better the attraction of this medium of communication after having to monitor and contribute this week

I think it the problems you mentioned you had experienced with brokers would be related to their skill level and experience.

I have dealt with a number of companies and trusts now and have also had multiple clients on the same loan application and title and 2nd mortgages for guarantorship. Off the plan purchases, owner builder loans, business refinances, and construction loans etc.

To be honest the first time I did panic. Now it is not so hard.

Like any industry there are good , skilled brokers and not so ethical, honest or reliable brokers. The new ASIC laws have tightened up the lending regulations and I think they have improved the quality of the industry and its credibility

2604, Ive used a broker for purchasing residential proerties on a number of occasions – mainly fo rthe same reasons that Jazz points out. Having said that, I have found that brokers have problems when the finance arrangements get complex or the proerty isn’t your run of the mill unit or detached house – and that’s where private banking services come in really handy.

hey 2604, I use a mortgage broker for my investments & do so because i figure my time is far better spent earning enough to pay the resulting mortgages than chasing around a whole bunch of different lenders for the best deal & structure.

Yes, i could do all these things myself, but i’d far prefer to be enjoying some music and a glass of wine and having a specialist take care of it and the mountains of paperwork that come with a loan application.

Hi Picketer. I’d just be interested to know. If an accountant offered you his services FOR FREE wouldn’t you take it? That is essentially what a broker offers. Why not get a recommendation or quote for a product from a broker? It costs you nothing. You can then go and compare that product for yourself. Using a broker is about saving you time and money. Isn’t that a good thing?

I’d be interested to know how many of the “property investment” regulars on RA (VY, George’s Genitals, and anyone else who contributes regularly when we discuss the topic) use a mortgage broker and how many seek out the best deal for themselves. Also interested to know why you choose to DIY or go through a broker.

No Newbies please.

Hi all,

I just wanted to take the opportunity to add my positive experiences in dealing with Rachael. Almost a year ago Rachael helped my brother and I finance the purchase of our home. We were both completely financially illiterate at the time and Rachael went above and beyond several times to make sure we understood the ins and outs of different home loans. This included the role of the solicitors (and she was able to recommend a good one!), the First Home Buyers Grant and our options with several mortgage lenders. At no time did we feel patronised or pressured by Rachael, in fact, she was all too happy to assist with a potential big problem caused by the lender days before settlement. I highly recommend engaging Rachael to help navigate through the pitfalls of buying a home. Thanks Rach!

My husband and I have been dealing with Rachael for about two years now and the service she has provided is beyond compare. I take the opportunity to recommend her every chance I get – which is why I am posting now. When it comes to the question ‘Why use a mortgage broker?’ I can give many reasons as to why Rachael’s services have improved my experience when securing a mortgage.
1. As I am a self-employed mother, she has been flexible in working to my schedule
2. Rachael has taken the time to understand our (changing) needs and sources a lender and product that suits us – she will also take the time to explain her reasons for this so I know the hard work has been done and I don’t have to spend hours I don’t have researching loans.
3. Rachael is with us for the long run – she is not just interested in finding a loan for right now, but assisting us with long term goals

I could say more, but I think you get the point – A good mortgage broker will save you time, effort and money and will not cost a cent

Keep it up Rachael!

Hi again Rachael,

My name is Andrew and Rachael helped me get a loan to purchase a house in Kaleen a 2 years ago. It is not usual for me to rave about service but she was so great that I recomended to her many of my friends from work. I know of at least 5 other people Rachael has done loans for who have been extremly happy with her profesionalism. She always made us feel like we were clients rather than a loan or commision waiting to happen. There was no pressure at all which I found so much better than the 2 loan officers we saw from CBA and ANZ. We are now looking to purchase another property and I am SO glad I stumbled on this thread as Rachael will be th 1st person I call.

Cheers again Rachael, love your work (and so do at least 5 other people I know!)

Hi Weekend Golfer.

I find that different people have different needs. Couples with children tend to prefer for me to visit them on a week night at their home around 7.00 -7.30pm. Many busy professionals like to use email for allot of the communication and they either visit me at the office in Deakin at lunchtime or I meet them at a Cafe near their workplace. I am a “mobile lender” so in the true essence of the word I am mobile.

Hope this answers the question

I apologise, my mistake. You are correct and I should have put more thought into the innitial response, typed it in a hurry, still no excuse. I was $12.27 out and that must be why my BAS is such a nightmare!

My aim was to give you an idea of the commission structure and how it operates.

Rachael, I have had issues with the banks for a number of years. Being treated like a number rather than a person buying my largest investment ever. As a mortgage broker, do I come to you or can you come and see me and my wife at a time that suits us (within reason of course)

Rachael Hunter said :

If I were writing a Suncorp loan of $300,000 I would recieve .45% commission. So I would get $1,350. From that I pay GST. So give $135 to the tax man. so I recieve $1,215 which I then have to take tax, super, insurances, advertising etc out of.

If the same loan where a ANZ loan I would perhaps recieve $1,650.00 gst inclusive, as they pay .55% commission.

I don’t think it is worth going through each of the banks commission splits. They range from .45% to .6% depending on your loan volumes and your conversion rate and the banks commission structure.

Hope that answers the question

Thanks Rachel – this is all really helpful.

Rachael Hunter said :

So I would get $1,350. From that I pay GST. So give $135 to the tax man. so I recieve $1,215.

Surely the GST portion of $1350 be $122.72, leaving $1227.27.

$1227.27 + 10% GST ($122.72) = 1349.99 (1 cent off due to rounding).

If I were writing a Suncorp loan of $300,000 I would recieve .45% commission. So I would get $1,350. From that I pay GST. So give $135 to the tax man. so I recieve $1,215 which I then have to take tax, super, insurances, advertising etc out of.

If the same loan where a ANZ loan I would perhaps recieve $1,650.00 gst inclusive, as they pay .55% commission.

I don’t think it is worth going through each of the banks commission splits. They range from .45% to .6% depending on your loan volumes and your conversion rate and the banks commission structure.

Hope that answers the question

…the good brokers I know would not hesitate to be as transparent as possible to ensure you felt comfortable with the product chosen.

Would you be willing to share with RiotAct readers the commissions offered to you by the various lenders? Some of us are curious.

It should be identical and the banks assure us that what we can offer is identical. Under the new ASIC laws a broker is required to disclose to you hisor her commission and you actually sign off To say you have been shown it and understand it, and the good brokers I know would not hesitate to be as transparent as possible to ensure you felt comfortable with the product chosen.

The loan comparison calculators we use match the products on the price and the requirements such as loan to value ratios, Loan Mortgage Insurance costs. Amount of income, amount of dependendants, serviceability,etc… not on the commission cut.

“should be” identical? Or you guarantee that it is identical? How is transparency ensured?

No the commission amount varies depending on the lender and the quality of my submissions and the volumes that I write. The commission is only paid to the broker once the loan is settled and therefore just getting advice from a broker, or submitting an application does not mean a broker will be paid.

Do you get the same commission irrespective of the lending institution?

We are called “introducers” by the banks so we are paid a commission by the banks to introduce business to them. The rate you would get going directly to the bank should be identical to the rate we can offer.

The difference is that we are “clawed back” or forced to repay our comission if a client leaves the bank we have introduced them to in the first 24 months. This means that all times I will aim to fit the best bank and the best product to the clients needs to make sure you are happy and don’t move banks.

At present most brokers do not charge a fee for service. As our licencing requirements change, this may change to. Not the case at present though.

At the moment the bank pays us and the service does not cost you

Hope this answers your question

So, just to be clear – do you get any kind of commission (or payment by another name) from the supplier of the mortgage? Or do you make your money from the client for fees for the service?