Good Evening to you all,
Today Tonight had this on their program tonight:
http://www.todaytonight.com.au/stories/525675.htmlThis is actually not new to me. There was a fledgling company which I looked into when looking to refinance, which offered a similar product.
Thinking about it, if they can afford to give back $600, how much money do you think they are making to cover this?
I want to read your thoughts.
Cheers
Sooshie [
]P.s. Would you believe I will be a mother of a 4 year old tomorrow [
] [?] Time flies.There are no problems, only solutions
Hi Sooshie,
I saw the Today Tonight interview last night as well. Its possible for them to “hand back” money to the borrowers because its not just the initial referral commission that the brokers get paid, its also the ‘trail’ money they get for the life of the loan. Some institutions pay a small (very small) percentage of the interest paid on the load to the broker for the life of the loan. So I’m thinking that they can afford to refund some of their commission because of the potential money they stand to gain, long term, from your loan.
I watched, like so many others I’m sure, thinking “whats the catch”??? But I think it could be a genuine thing – Is it possible to have a broker that genuinely works in your best interests??????? []
Happy birthday to your daughter! [:0)]
Regards,
Andrew.I recently had a loan approved for $150,000 and the broker’s commission was revealed on the loan documents as approx $1,200.
I saw the program last night too. That company was offering approximately $500 back on a $150,000 loan. Therefore, the bbroker was still earning approx $700 plus the trailing commission for the life of the loan.
This company aint doing it from the goodness of their hearts. It’s a marketing ploy and a smart one.
It just goes to show you how easy it is for mortgage bokers to make money. We should all quit our jobs right now and join them. [
]Hi Sooshie,
Our broker sent us a cheque for $300 after a Westpac loan settled about 15 months ago. He offered it when he was writing the loan and it was a bonus to actually get it.We have since purchased a few properties through another broker (as the above one couldn’t help through Wpac), no mention of cheque but are looking at two more through the first broker. So will have to remind him!!!
AnnaJust a thought – why do you think it was necessary for them to give a cash inducement?
Because the mortgage broking industry is a cut throat place to be – sure the rewards can be great, but competition is tough. There are many brokers who don’t genuinely go thru all their available lenders – so they are not giving you the best deal – just the best commission for them.
Chasing lenders for trailing commissions can be very hard, so a lot of brokers don’t bother with trails. And, believe it or not, lots of people apply and are approved and then change their mind – so a lot of work is done for no return.
Often, a broker gets the loans that are hardest to finance, and spends many more hours trying to place a loan than you would imagine. Even tho’ a broker gets paid good commission, the loan is no dearer to you because of this.[][]
And in the end, if they get you a good deal, then they deserve what they earn, and so do you.[]I’m a mortgage broker. I must admit, at times, we have offered clients small cash incentives. However, it can be difficult to do so becuase we spend a lot of time for clients making ensuring we find the best deal (include writting a mortgage analysis report, etc.) and ensuring the whole loan settlement process goes smoothly. This can (and should) take many hours.
As such, the question I would pose is “If a broker is going to rebate the majority of their commission then what quality of service do you expect you’ll receive?” If the going gets tough then do you think they will cut corners???
My advice is forget about trying to make money out of your broker. I would suggest focusing on getting the broker to really work for his money. Ensure they do a robust financial analysis and genuinely save you time by doing most of the admin and keeping on the back of the lender. After all, if they save you an hour then that’s anyother hour you could be on the road searching for your next property.
Anyway, just a few thoughts… good luck.
Hi,
Thank you for all your responses! I’m just about to put boys to bed. Phillip has had a wonderful birthday, thank you for all your birthday wishes! He and little one are watching Stuart Little 2 and I snatched a couple of minutes at the puter.
Stuart, I’ve read some of your posts and you seem to be pretty honest with regards to your job, however of course you’d say this
My advice is forget about trying to make money out of your broker. [
][][]Sorry, just had to laugh, when your first line said
I’m a mortgage broker.
I’m not sure what you get, but 0.1% trailing commission on the life of the loan, is no small sum. It’s true, getting your broker to work hard is very important, but anyone would be a fool, not to try to get the most from their money.Cheers
Sooshie []There are no problems, only solutions
lol
All the brokers are jumping! [
]An even better story would be the applicants deciding to give him some of the 600 dollar rebate to the first broker for doing alot of the work! Or bought him a bottle of Champagne atleast. Then everyone wins!
[
][][]Cheers,
Nathan
I’d say any rebate is just another number to plug into your financial calculator when doing your due dilligence calculations. I remember Peter Spann saying on one CD that most Australian banks make as much (or more!) from their mortgage fees as they do from the interest (as all their customers focus on getting a low, low interest rate beyond all else). Sure X hundred dollars isn’t something to be ignored, but if they’re charging it back (and then some!) by giving a higher commission to get your broker to put you into an unflattering loan then what’s the point? Ultimately what seems to matter most to me is (still) just putting all the associated numbers through a calculator and figuring which loan takes you closest to your goals.
Let all the numbers decide! All else is financial candy. [
]Quasimodo
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It seems to me that action has a most magic way of answering all the questions our fearful mind tries to throw before us…
__________________________________________________PS!
For anyone who hasn’t the foggiest on calculating the impact of the mortgages they’re looking at, Cannex has a funky little calculator at http://www.cannex.com.au/mortcalc.html that will give you the APR of your mortgage. The APR (or true rate) is what the interest rate they’re charging *would* be if you include all fees and charges! Not perfect, but very enlightening! Most of the loan products out there they’ve also pre-calculated already and can be seen at http://www.cannex.com.au/surveys/mortgage.htm .
Invest well kids!
Quasimodo
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It seems to me that action has a most magic way of answering all the questions our fearful mind tries to throw before us…
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][][][][][][][][]Hi Guys,
One thing to keep in mind when looking at an AAPR calculation is that it does not take into account fees that may or may not occur during the life of the loan. An example would be two idential loans, one with fees for redraw and one fee free. Both would have the same AAPR.
Also the AAPR caluclation does not take into account the features or level of flexibility in the loan.
Its a good tool, but has some limitations.
Cheers and happy investing,
Nathan.[
]Hi guys
i got onto a Finance company that pay me $250 everytime i take out a loan or a friend takes out a loan. I got 5.9% no fees and redraw. If 4 friends take out a loan they send me and my wife to Sydney for the weekend airfares and accom incl plus $500 spending money on top of the $1000 go to http://www.stellarfinance.com.au and be sure to tell them i sent you so that i get another trip.
[
][][][][][8D]
GaryYou guys are a tough crowd!!!
Hi,
LOL at Stuart! Okay, just having some fun. Life is getting too serious with all the world trouble.
Hilary is right, brokers to have to put up with troublesome customers who change their minds,leaving brokers with a huge explination to their boss what all that paperwork is for when there is no client.
The Banks obviously make a loss and that’s why they’ve all gone bankrupt (okay so I’m late for April Fools Day [:0)] Please DON”T go out and sell your bank shares)
Gary seems to be on a good wicket and Nathan, I can think of a lot of things to do with a bottle of champagne. Just pass one my way!
Quasi, thank you for your link, I think it may already be in ‘useful link’ post, but if not, I may transpose it if your okay with this.
And almost finally [] Imagine I’m a travel agent and each time someone booked a flight I gave them $500 cash back. Do you think I would make a living in a cut throat business?
Brokers, whether it be travel agents, finance or share brokers etc all make a commission. You’re right, it’s their pay for the effort and work they do. Perhaps as a Nurse/Midwife, I should get a cash bonus from each client that I help birth? I don’t think so. (Nice try Sooshie!) No No, I don’t think it works that way, BUT what if I was a broker for a hospital and they said, for every client you bring into the hospital, we will give you $500. Let me tell you that I would jump up and down, do cartwheels ( a site for sore eyes, just ask Steve!!!), wear bear/clown suites and anything I could to get clients into the hospital, BUT only if I believed in the hospital, it’s values and how it treats and respects it’s clients.
The same, I guess with a broker. His commission is worth the money you pay, if they deliver you a good service and they truly believe in the product they are selling to you (and can prove it will work for you). A fair days pay for a fair days work ( I hope that’s how it goes). If he wants to give you a cash rebate, take it. He wouldn’t offer it for nothing!My 2-Bobs worth![
]Sooshie [
]There are no problems, only solutions
Hi again,
By the way, I forgot to mention (if you were wondering about the likeness of a broker to a travel againt) that I went into Flight Centre, got 1 quote then went into another Flight Centre and got a quote (cheaper) then went into another Flight Centre and got a quote and then finally with the cheapest quote, went to a qantas agency and showed them my cheapest quote and booked with them. Okay, so I’d upset many FC agents and they look at me with dread when I come in to get new travel catalogues (going to Fiji in June – G-d willing!) but my hubby said that if I didn’t get the price down to our budget, we weren’t going. Desperate measures for desperate times. Yes, those FC agents did do some work to get me a quote, but when they do make a booking, the commission more than compensates for the losses experienced with painful customers like me.
Talk about a hard nosed consumer! (Nice anatomy analagy [
]) C’est Moi.A cheeky Sooshie [
]There are no problems, only solutions
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] [?] Time flies.
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]The topic ‘What do you think of this?’ is closed to new replies.
