All Topics / Finance / Short Term Borrowing through a Mortgage Broker

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  • Profile photo of emmybemmyb
    Member
    @emmyb
    Join Date: 2009
    Post Count: 23

    We are looking at purchasing a property for a renovation project and need to borrow 80% from the bank. We would then like to sell the property once the renos are done.

    However my mortgage broker has just mentioned that if we want to pay off the mortgage within 18 months they don't make any commission so it's not worth it for them.

    I think he might ask us to pay him a fee instead of the bank paying commission.

    Has anybody heard of this type of situation before?

    Cheers

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Yes i guess i can understand where he is coming from.

    He arranges the finance, does all of the work, gets paid and then looses every cent because you pay the loan back and make your profit.

    I guess couple of choices is pay him a Brokerage fee or let him use a lender that charges you a early repayment fee and yet he doesnt loose his commission.

    I have a fair few clients with whom we charge a fee for our work especially developer clients and they get a bloody product.

    Normally $500 which is cheap for development funding.

    Richard Taylor | Australia's leading private lender

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674

    Yes It is known as claw back of commission
                                    However
    Look into whether any lenders on your mortgage brokers panel support loan portability
    This allows you to transfer the security of the loan when you sell to
    the next home purchase – the next reno project via transferring the security rather than ending the loan and saving loan establishment fees on the new property.

    As an example of this feature see below

    See portability in links below.

    http://www.homeloanshop.com.au/borrowing_from_us/glossary.html
    http://www.defcredit.com.au/Assets/910/1/Homeloans-ProductProfile.pdf
    http://www.teacherscreditunion.com.au/Loans/Home_loans/Your%20first%20home/Now%20its%20yours/Making%20the%20most%20of%20my%20loan/Portability.aspx
    http://www.homeloandepot.com.au/loan_portability.php

    Profile photo of WhatIfWeFinanceWhatIfWeFinance
    Participant
    @whatifwefinance
    Join Date: 2009
    Post Count: 58

    As the other readers mentioned it is clawback.  However there are a number of ways around this as the other users have suggetsed. In the end the broker should be able to recommend solutions that ensure you get a great product and also he does not get penalized.

    Regards

    Profile photo of emmybemmyb
    Member
    @emmyb
    Join Date: 2009
    Post Count: 23

    Thanks heaps guys. Your answers have been a great help.

    Will discuss portability with my broker.

    Emmy

    Profile photo of steve-investsteve-invest
    Member
    @steve-invest
    Join Date: 2010
    Post Count: 30

    This broker will finance these for you with no charge, he financed one of my renos last year .. at no charge whatsoever , I sold it just after 12 months with no issues, just talk to him about it. [email protected] cheers Steve.

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