Thanks Marty,

Perhaps the question of whether the ban is a good one or otherwise should be raised as a separate thread in the Opinion forum.

However the issue raised by dbomber in this thread seems to be that he thought that break costs were exit fees, which of course they are. He also inferred that he thought exit fees were banned outright as the Government claimed they were when in fact they aren't.

Although dbomber seems to have disappeared (perhaps disheartened by the earlier posts), there is a basic legal argument that he is entitled to recover some or all of his break costs from the Government to the extent he has relied on its claim that Exit Fees were banned outright. There was also an earlier promise from the Government that ASIC will go after lenders that simply seek to rebadge exit fees, but of course their own legislation would probably make this quite difficult to do.

I am already working with borrowers like dbomber, who want to break their fixed rate loans and am quite optimistic that we will get a result. Of course this also extends to discharge fees on all loans since the so called ban came into effect.

Cheers,

Michael Lee

Thanks luke86 and you too Tracey B,

However this isn't a battle with the banks, it's with the Federal Government. It also isn't waged on the basis of people who understood what they were getting themselves into (although I understand that people like Solomon10 think that they should have known what they are getting themselves into and should foot the bill).

It is for people like dbomber who have relied on information from the government and advice from perhaps less scrupulous operators on how a Fixed Rate actually works. Just like everybody here, he is entitled to some independent, reliable input.

I also understand that most users in this forum have a passion for answers BEFORE they take the leap, but I also understand that doesn't apply to the whole fixed rate population and I was really only responding to dbomber.

There is the sideline distraction that some are running claiming Break Costs are not Exit Fees, they clearly are. It's simply a case that the Governments abolition of Exit Fees wasn't really an abolition, which is why this is a battle with them and not the banks.

The motto I subscribe to is "Man fool you once? Shame on him. Man fool you twice? Shame on you". It is the people who got fooled once by the Governments Exit Fee ban that this fight is worth having.

Cheers,

Michael

Terryw

Nothing new in your post and it pays to look at the thread where way back in the beginning  I posted:

Solomon10,

I understand your point of view and agree, but offer the following inputs to your thoughts.

Excepting solicitors, most people who read contracts don't understand them and have those bits they don't understand explained to them by people they trust i.e. their bank manager, their mortgage broker. If the banks and the brokers are wriggling around all over the place trying to convince you that a break cost is not an Exit Fee, then well, you know…

Another point is that the contract will not stipulate a fee per se, rather a clause with some type of explanation of a formula or formulaic principle. It is unlikely to be called a Break Cost or and Exit Fee. It probably should start with something like WARNING, but of course it doesn't.

And yet another point is that human nature means we tend to see only what we are looking for. Some borrowers are lead to believe that Exit Fees are banned outright and these people in believing this are more likely to not see the trap.

And so on.

The main point again remains that Break Costs are Exit Fees and the Government has declared Exit Fees abolished, when in fact they are not.

This appears to have caught out dbomber and that isn't quite fair.

Thanks for the feedback Jamie, but there was more than one question and I think the others are more important.

The answer to this question seems to be that you side with the Banks and the Government on this and that's fair enough, however I see things differently because I'm a squarely on the borrowers side.

I believe for example, that if a person is misled on entering an agreement then they ought be able to get out of that agreement on equitable terms i.e. those who did the misleading should foot the bill.

If dbomber didn't fully understand what he was getting into and he relied on information from the Government (as it appears), plus information from his bank or broker (which appears to be inadequate) then don't you think those professionals have a case to answer (the Government for sure).

As a broker who deals with this stuff day in and day out, you appear to have lost touch with how overwhelming mortgage selection is and the abundance of information that is dumped on prospective borrowers from marketing through to disclosure documents.

This leads most people to rely on basic information delivered by banks, brokers and now that it has become such a big player in all this, the Government.

The Government claims to have banned exit fees outright. Break costs are an Exit Fee. If you or anyone has any evidence that either of these things are wrong, post it. Otherwise we should be honest and stick with the facts.

If on top of those facts, dbomber entered into a fixed rate believing those facts, regardless of how naive others may think this to be, it's not right the he or anyone else finding themselves in his position should foot the bill. Those who knew better and claimed to be helping/protecting him but did not are the ones that should pay the price.

Sorry Keiko. I was answering your question. 85% no LMI is possible still subject to my earlier comments.

Cheers,

Michael

Hi Dave,

You have every right to be confused. Besides you, Luke001 is the closest to the complete truth – i.e. that borrowers get caught out by the contradiction and misunderstanding.

The broker responses here demonstrate why this is such a problem. Although many now claim Break Costs on Fixed Rate loans are not Exit Fees, it is widely acknowledged that they are. Banks and brokers trot out a different line to keep themselves out of trouble when people like you start asking for a refund.

Break costs on a Fixed Rate are an Exit Fee as are Discharge Fees.

The issue here is that you and many other borrowers have been left in the dark – although it was promised that Exit Fees were banned outright, only one particular type has been. Everything else is smoke and mirrors.

I am aware of borrowers that have had their break fees on Fixed Rates waived or reduced., and if you have been duped, I think you should go after yours as well.

<moderator: delete language> Others trying to make a fool of you can only succeed if you let them.

Cheers,

Michael

House Call,

Great you have found a solution.

If you ever need SMSF funding, one of the leaders that I've turned to for my articles (and most of the media has as well) is i-financial. Ugly website, but a good knowledge source at http://www.ifinancialgroup.com.au.

All the best,

Michael

Gidday Gents,

Firstly, there is a real difference between a shovel and a spade, one is for digging, the other is for shovelling.

Similarly there is a real difference between a mortgage broker and a borrowers agent.

A traditional broker works for commission and has no agency/loyalty contract with anyone. Traditional brokers are a significantly more expensive option for the consumer.

The perception that mortgage brokers are professional salespeople is accurately driven by the basis of remuneration i.e. commission. That commission is paid by the lender and variances lender to lender, product to product, feature to feature is vast (i.e. $24,000+ even before you start talking about interest only, fixed rates, loan amounts etc).

This income pressure does not apply to a broker operating under a pro-consumer agreement as any commission surplus to their costs is  passed back 100% the consumer.  As their fees are unlikely to exceed even a few thousand dollars, the cashback to the consumer is very significant and there is no "in panel", anti consumer pressure. However these folks, for the most part, still only make money if they sell a loan.

A Borrowers Agent has an implicit agency agreement with the Borrower. Unlike a broker they do not have a commission paying panel and look not just across lenders, but broker offerings, including cashback deals as well. There is no conflict of interest at all whether you are talking about structuring, lender selection or any aspect of borrowing.

You should appreciate that the word Agent has significant legal implications and, once 160B is implemented, so are words such as impartial, unbiased and independent.

The key thing for borrowers to understand is that this legislation (160B) removes the commission driven mortgage brokers ability to lawfully use these terms and the wriggle room still used by many.

Despite changes in the law, Borrowers Agents will still be able to use the words impartial, unbiased and independent. Pro-consumer mortgage brokers will, perhaps with some limitation, be able to use these terms as well.

In addition to the pro-consumer, anti-commission ethic built into their revenue model, both of these options usually deliver mortgages from the the vast majority of popular lenders for significantly less than the lenders themselves as well as commission based mortgage brokers.

Unbiased, impartial and independent help with your mortgage for less.

Cheers,

Good point Luke,

Tax advice, estate planning and asset protection are all critical considerations in any investment decision.

It's great to bandy about ideas however when the rubber hits the road, get individual advice and make sure that this advice is independent and from a suitably qualified professional offering a written opinion.

Mortgage brokers arrange loans and when it comes to actual loan/lender selection, it still pays to remember the serious anti-borrower bias that can weigh into the advice of traditional brokers.

Borrowers agents don't suffer this problem at all and pro-consumer mortgage brokers don't suffer bias within their lending panel. Both are licensed professionals for the purpose sorting out your mortgage.

All the best,

Michael