I’d have to disagree!! The system was set up not for our benefit in the first place. Our ONLY goal is to make money out of it, not to worry who makes money from our activity into the marjet. Sorry to be so stark, but the facts……
ShaneB
If you are a MB then of course you would have to disagree. Furthermore, the system was setup to make money for MB companies and brokers not purely to assist customers find the best deal. I dont have any problem with a MB or Insurance Broker for that matter earning a one off commission for introducing me to a lender or insurer. I do however have a massive problem with never ending trailing commissions of $20000+.[
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The reward must be commensurate with the input.Hi HousesOnly,
Not sure where you found $20,000 commission in my reply on portion of loan, it’s no where near 4%!! If I do a loan for $200,000 I can really only expect about $1,300 up front commission, and even on I/O for the next three years that’s only another $400-ish per year. The average loan length is about four years because people sell, refinance out etc etc. Even if the loan were paid out over 30 years, then the trail diminishes while inflation, cost of living etc increases and in today’s dollars I think it’d be closer to $4-$5K than $20K, and I believe that this is good value for the expertise & service clients get and it is comparable to what the banks would spend internally maintaining branch offices, staff & advertising to get you to walk through the door with a $200,000 loan request.
Plus a good broker will save you much much more than that getting you into the best deal & sructure than a lender with a limited product range may be able to do.
Hope this helps allay your concerns. We’re not that bad, honest!!
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Mel
Michael,
Melanie is spot on so I won’t rehash what she has alredy outlined.
Its worth considering becomming a broker even if its just to service your own finance for the following reasons.
* The commission structure is pretty handsom
* Its part of your education anyway
* Its often not just a box ticking exercise as many brokers have access to low rates that the man on the street can only obtain via a broker
* Most loans have a brokerage allocated to the cost of the finance built into the loan conditions..you may as well take the fees for yourself.There will be some probity issues to deal with in submitting an application for yourself… but its worth considering.
Regards
Rob[8D]
Would you really go through all the expense and time to set up as a broker to do your own finance? Thats like getting qualified and fully insured as a mechanic to work on your own car.
Just find a broker you can trust and who looks after you. Don’t resent the commission they earn for that.
Melanie sounds like a great broker to me.
Houses only…. whatever a broker earns isn’t costing the mortgagee a cent. The mortgagee pays no more by using a broker than if they did everything themselves. The other way to look at the coin is to see yourself getting a professional to do a lot of your legwork for free.
Are you a glass half full or a glass half empty sort of guy?
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Mel
Some fair points and yes I know you are not that bad. You did however previously mention a range of between 6 and 8% up front and half of that each year. So based on 8% this would be $1600 up front and $800 each year. Using the above figures $1600 + $800 X 30 = $25600. This excludes the cumulative interest paid on this extra little bit each month as well but assumes interest only an thus no reduction in loan balance over time. Yes granted most OO loans only last 3-4 years but for the long term investor in IP it is probably longer than 4 years(dont have these stats!!). Even if you are only in a particular loan for 4 years you are likely to upgrade or be in another loan straight after that which means that in reality you are always paying the $400-800 each year even if it is with another broker and different lender.[
]Now I understand – HousesOnly the commission rate is 0.6% to 0.8% – you’re missing a zero!!
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MelHi Simon…
No… “I” wouldnt go through the expense and time to be my own broker, just to save a few bucks…However that wasn’t the question being asked that started the forum.
The question was.. “How does one become ones own Mortgage Broker.”
You analogy about being a Mechanic to work on your own car is drawing a very long bow. Becoming a Broker is infinately quicker and easier than becomming a Mechanic.
My point was… that as a part of Michael’s education in the property business he could(not that he neccessarily would) become registered and claim the commissions and trailers for himself.
I didnt say it was easy…In fact I pointed out that its NOT just a box ticking exercise.
Finally…I’m a half full kind of guy.
I don’t resent commissions to anyone. In fact if you check my replies to other Forums, I usually end with “Every man to his own trade“
I agree that Melanie does sound like a good broker and FYI I’m a Mortgage Broker too.
I just posted a quick reply without disclosing my background or contact numbers because forums are not the appropriate place for spruking for clients.
Much of your posting was pretty defensive..Forums are a place for friendly discussion. Comments are not meant to be offensive… they are just comments.
Regards
Rob [8D]
Hi Melanie
You forgot to mention claw backs!
If a loan is paid out or refinanced within 12 months the borkers usually have to give back all or part of their commission to the lender. Thats one reason why it is not wise to rebate any commission to the client.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Good point Terry, clawbacks hurt, especially CBA who clawback up to 18 months after settlement.
OzBravo – I think you are spot on too – complimenting my own vision of financial success was certainly a key reason I got into Mortgage Brokering, how about you? As an ex-ginger beer I like working with no.’s and as someone seeking a financially free and exciting future, not PAYG boredom till 65, I thought this industry would be a fantastic way to become a specialist in one of the key areas of investing, and it is a great service industry.
As a general rule I’d estimate that to get into mortgage brokering, unless you have a ready stream of potential clients, you need to have savings to cover minimum 6 months living expenses and startup costs of $10-$15K, more if you are buying into a franchise.
It’s good to be ‘out there’ !!! [
]Mel
Rob,
You know we have more in common than you realise and I wish to apologise as it sounds like I offended you.
I don’t doubt that my analogy was flawed but I guess I was trying to make a point and couldn’t think of anything better at the time. Most analogies are pretty flawed once they are under the microscope. I can’t even think of a better one now – but it has been a long day [
]But even after considerable thought I still maintain that it wouldn’t be a worth while exercise to gain accreditation and join with an aggregator just to write your own loan. Especially as you will need PI Insurance which starts at about $1200 unless you get a deal through your aggregator. Unless of course you are borrowing an huge amount – but in that case I am sure you would find a broker willing to rebate much of the fee.
I think adding my details gives me credibility as a poster, I certainly wouldn’t have worded my post as I did had I known you weren’t as naive as I thought you sounded (I mean that in the nicest possible way)! [
].Cheers mate,
Simon
PS removed my signature for you.
Hi Simon,
Thanks for your kind reply.[
]Fortunately we live in Australia where you can be friends and still have differing points of view.
Sorry…My point about signatures wasnt intended for you to remove yours… Rather, I was explaining why I had made my post anonymously.
To be honest It hadn’t realised that you had included contact numbers untill I read your reply and you are right…It does add credibility.
I cant really see the harm in including it.Regards
Rob [8D]
Hi Melanie,
How do you keep up with this forum?![
]I pretty much became a broker for the same reasons as you I guess, however I am not full time as I love my other job and would do it (my other job) rich or poor. Preferably as a hobby in the future because I have a funny feeling for the first time in a long time that I am going to be financially free thanks to Steves book.
Best of luck and remember…Every man to his own trade (LOL)
Iv’e got to get out of here…these forums are seriously addictive![
]
RegardsRob[8D]
WOW,
you go away for a while and look what happens with ya question !
As Johnny 5 wouls say ” INPUT “.
[]
MichaelHi All
I would agree that becoming a MB for the purposes of only saving the comm. on one property is not a worthwhile proposition. But becoming your own MB if you were in the process of acquiring many properties and/or refinancing some existing properties would make a lot of sense. If you only acted as MB for your own properties you would not need PI insurance and may not need to join an aggregator. Some investors in this forum have 10 or 20 IP’s some have 130. I would be very surprised if Steve wasn’t his own MB.
I must concede that MB’s do provide a valuable service for some clients especially those who have less than perfect records and those that are time poor. But for the professional/semi-professional property investor it could well make sense to do the 3 week course and join the MIAA and sit their tests.Now that’s good advice, & safe as houses ! [
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You create your own reality.There are persons out there with 100’s of IP’s, I’m sure of that.[
]MIchael
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The topic ‘How does one become one’s own Mortgage Broker ?’ is closed to new replies.
