Searching for mortgage brokers who pay lenders’ trailing fees to borrowers

I cannot see why a broker would do this.  You would essentially be asking them to write your mortgage application and go through the pain of seeing it through to settlement (no small task these days thanks to banks offshoring whole departments within their organisation) for virtually no pay at all.  You wouldn't go to work every day for free, so neither can a broker be expected to…

I would be willing to do this in exchange for an upfront brokerage fee. However the administrative burden of transferring the trail each month to the client's account would be high, so my upfront fee would need to be higher.

I think you will find it hard to locate a mortgage broker who will be willing to give you all their commission, as this is the only revenue that they receive (i.e they don't charge the borrower).

There's a common misconception that the commission brokers receive is added to the interest rate of the borrowers product when it is far from the truth as it doesn't have any effect at all. So in effect by asking for trail commission a borrower would be asking for a cheaper rate.

My clients come to me and utilise my services in the knowledge that I am looking after their needs and I actually ask for nothing in return from them. So a payment from the lender I think is fair.

Cheers

Tom

Hi Bertie

Without sounding arrogant – I doubt you'll find a high performing broker that will rebate part of their commission. 

Cheers

Jamie

Your best option is going direct to lenders and try to negotiate a lower borrowing rate based you are not using a broker. you will need to have your planning and figures in order and laid out and being a long term client with good history will help your case

a) there are at least a dozen lenders out there – do you suggest the OP to approach each lender one by one or have the broker do this?

b) right or wrong – rate is one of the last things we talk about with clients. There is so much more to a loan than just rates. Careful long term portfolio planning is key.

Sorry Ozman, but it doesn't work like that. If there is no broker there are branch and related costs. Broker commission is not a direct added expense, there is no lender that will discount the potential brokers commission just because there isn't a broker involved. I'd be pretty surprised if any individual could negotiate a better rate than a good broker, but in the case above the loan amount won't be sufficient to get a negotiated discount anyway.

Alister I agree that on the face of the information supplied they are not in a very strong bargaining position. They are certainly not in the Premier banking customer category and

the deal they can cut will depend who they bank with in this case. In the present financial climate first time buyers need to be looking at their figures very closely and factoring in higher interest rates with a plan on how they will manage same. Having bought my first in the days of 15%, I have always been able to negotiate with the finance provider for a good deal.Back around the early to mid 80s  I can remember buying bank bills with a 20% return, lets hope we don't end up back there as inflation on that scale destroys many struggling investors.

As a matter of interest, in the present climate, how many percentage points below the standard variable rate  would your best final rate to the borrower be. (Best Case Scenario)

Asking the question while knowing the answer???

The fact of the matter is YOUR SHARE is a misnamed company. They ask you to transfer your relationship from the broker who put the effort into getting your finance approved over to them. And as they have not invested any time into you, they don't have any overheads to cover, then they split your brokers trailing commissions with you. So you have paid YOUR SHARE for doing nothing and you get to pocket the rest, while you have stiffed you broker for doing nothing wrong. That makes you a dishonest customer and YOUR SHARE a bunch of backdoor merchants.

When you engage your broker would you be happy tell him upfront "hey, you do this work for me and I will get another company to rip off half your income and spilt your trailing commissions with me" 

It's a bit like your boss selling your holiday pay, your super and your sick leave to another company so you wont get any of it down the track. 

Having used the services of a mortgage broker many times, they are worth their weight in gold! I would never consider expecting them to be paid less. All you need to do to understand the value of the work they do is try dealing with the banks directly once. What a nightmare! I promise that you will go running back to your mortgage broker ASAP with a new found respect for how easy they make your life and be quite happy for the banks to pay their trailing fee.