Just a general question on mortgage brokers. As you build a portfolio and provide a mortgage broker with more business, do you sometimes get other benefits like commission rebates or access to better rates than smaller clients. Do most investors with large portfolios on the forums use brokers? From what I've read it seems that if you maintain all your finance with one bank, because of the greater concentration risk to the bank they'll put greater constraints on your LVR, whereas if you spread the finance across a few banks you get greater LVR across the portfolio. Have others found this as well?
Thanks.
Mgs4 wrote:Just a general question on mortgage brokers. As you build a portfolio and provide a mortgage broker with more business, do you sometimes get other benefits like commission rebates or access to better rates than smaller clients.Thanks.
No, 1 -10 loans we treat all clients the same. Same discounted rate and service.
Mgs4 wrote:J From what I've read it seems that if you maintain all your finance with one bank, because of the greater concentration risk to the bank they'll put greater constraints on your LVR, whereas if you spread the finance across a few banks you get greater LVR across the portfolio. Have others found this as well?Thanks.
^Half correct. It';s not just the LVR that gets restricted but also serviceability/ LMI cost , chance of approval and flexibility all comes too play when you concentrate too much lending with one lender.
Cheers
Michael
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
To me it doesn't matter if the client is buying their first property worth a few hundred thousand or their umpteenth property with a portfolio in the millions, I try to get a better than carded rate after finding the suitable product for their needs. So as Michael said above everyone has equal standing. Though a lot of lenders do have natural tiered interest rates dependent on amount borrowed.
As for financing options, you would have heard the term "not putting all you eggs in the one basket," the same applies to financing properties. You don't finance all your properties in a large portfolio with the same lender due to the reasons you and Michael mentioned above. Good brokers can help avoid these issues.
Cheers
Tom
Mgs4 wrote:Just a general question on mortgage brokers. As you build a portfolio and provide a mortgage broker with more business, do you sometimes get other benefits like commission rebates or access to better rates than smaller clients. Do most investors with large portfolios on the forums use brokers? From what I've read it seems that if you maintain all your finance with one bank, because of the greater concentration risk to the bank they'll put greater constraints on your LVR, whereas if you spread the finance across a few banks you get greater LVR across the portfolio. Have others found this as well?Thanks.
I treat all my clients the same too – irrespective of how many properties they've purchased. I've never had an existing client ask or expect a commission rebate – if anything, I've been told I should be paid more for my services!
A good broker will work with you throughout your investing – deal with someone you can trust, is responsive, knowledgeable and easy to get along with.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Once you have a good mortgage broker.. the relationship and the history will allow you to benefit from better service. Don't be greedy by asking for a rebate on commissions. If you keep using them it means you they have done a great job for you… Don't ask them to discount.. that's a quick way to destroy a good relationship.
Does anyone have some recommendations on research and questions you should do to see if you have a good mortgage broker. The reason I ask some of this is there is obviously a scope for a conflict in interest in the mortgage broker recommending certain banks because he gets better commission, where we may not know of superior rates/process with another lender that may not give the mortgage broker as good a comm.
1. A good credited broker will give you the commission break down of each lender + a summary of the top banks he/she has submitted in the last 12 month and lastly they will def give you a reason for the recommendation. Discuss and adopt/change if required.
2 The difference btw commission btw the highest bank and the lower bank is minimal; 0.02-0.10%— so i be supervised if a broker or ANY service provider makes recommendation on commission alone as the product may be "unsuitable" for the client in the long run. In any business it's all about stability and word of mouth referral.
3. End of the day, the broker or service broker should give you a reason for the recommendation; for a broker it be mainly based on;
– Policy
– Equity
– LMI
– LVR
– Acceptable security
– Speed
– Customer service
– Meets your requirements
– Rates
– Fees
– Serviceability
– Loan structure
– Short and long term goals
4. If the product meets your requirements, i can't see why you have any issues. Lastly nothing wrong with going to the bank directly ( in fact my first loan before i became a broker was done directly with the bank i grew up with) but end of the day how can you trust the product and structure on offer is the most suitable?
So trust plays a big part in a broker-client relationship….in any relationship for that matter.
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Mgs4 wrote:Does anyone have some recommendations on research and questions you should do to see if you have a good mortgage broker. The reason I ask some of this is there is obviously a scope for a conflict in interest in the mortgage broker recommending certain banks because he gets better commission, where we may not know of superior rates/process with another lender that may not give the mortgage broker as good a comm.I don't know of any decent broker that will steer you towards a bank that pays a higher commission. That sort of behavior results in businesses closing down – they're not acting in the clients best interest so they won't last long in the industry.
For what it's worth – the vast majority of lenders pay the same commission. As Michael mentioned – it can fluctuate by a little bit.
Some of the non-conforming lenders pay more – but it's not the sort of business I'd personally want to write.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I likewise treat everyone as equal. In fact some of my best referrers are people that I assisted at zero benefit to myself.
I managed to save my neighbor $2000+ in interest payments by sending a pricing request to their bank.
She gave me a thank you card with a lotto ticket enclosed. Unfortunately wasn't a winning ticket
Colin Rice | CDR Finance
http://cdrfinance.com.au/
Email Me | Phone MePerth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]
I've read a number of books and articles that say you should always at least ask the question to a prospective broker whether they are willing to refund a part of their commission. As they are all well aware, the best commission and their long term income is provided by the trailing commission and whilst I personally would never ask to garnish that, I don't see a problem with asking for a part of the upfront commission back to cover some of your own costs, particularly if you are planning on putting a substantial amount of business through them.
For a referral, I would say this could also apply. There are also many brokers out there who will sacrifice a small percentage of their up front commission for referrals because it's better to get smaller percentage of something than nothing at all – and they will still get the trail. If you bring them business they otherwise wouldn't have, I would suggest that's worth something. If showing some gratitude for bringing them business by refunding you some commission turns the relationship sour or lowers their standard of service, then I would suggest they are not the right broker for you regardless.
I was recently searching for a new broker and put this question to a few out there. Some said no but I found a couple that did, I chose one and have subsequently put about $3million worth of loans (both from my own purchases and referrals) through him in the space of two months with many more to come given my circumstances. I would say it was a smart decision on his part to sacrifice a small percentage of his up front commission for that kind of business. I get no referral commission at all – I refer people to him because he's an excellent broker and his future clients also get the benefit of a small refund. I've dealt with a number of brokers in the past and I can assure you that I haven't found one as good as this guy to date.
No broker on this forum is going to encourage you to ask them to give you some money back from a deal and although my reply is not going to be popular with some on here, I am sure they are still fantastic brokers. However, if you can get the same service and some of the commission back, why wouldn't you choose that option? Just ask the question.
Good luck with your search.
I don't rebate any commissions, in fact I actually charge people who ask me to rebate. They are not the sort of clients that I want, so I am happy if they leave and happy if they stay (and pay a fee!)
However I do offer many clients extras with discounts or without charge. Good clients often get offered free legal advice or testamentary trust set ups for free etc.
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
dragun wrote:I've read a number of books and articles that say you should always at least ask the question to a prospective broker whether they are willing to refund a part of their commission.Without sounding rude – I'd politely decline the business.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jamie M wrote:dragun wrote:I've read a number of books and articles that say you should always at least ask the question to a prospective broker whether they are willing to refund a part of their commission.Without sounding rude – I'd politely decline the business.
Cheers
Jamie
Accurate in my case too.
The way I see it, I'm offering a service where I am not asking for anything in return. To actually pay a client for the right to do some work for them doesn't quite cut it with me.
I would like to see them try and go direct to a bank where the knowledge in most cases is not as great and ask for a rebate and see how far they get.
I do however reward referrers with gifts of various sorts.
Cheers
Tom
I appreciate the services of a good mortgage broker and am very happy to pay if he has got me an exceptional deal, especially after dealing with some duds. Good service should be rewarded. My broker got me a commercial loan for 4.93%, where other brokers couldnt get a loan, or the rate was higher than they said it would be. I would be wary of the competency of somebody who cuts rates in order to get enough work, and how hard they would work to get the best deal, The best deal may not be the best rate either.
Jamie M wrote:dragun wrote:I've read a number of books and articles that say you should always at least ask the question to a prospective broker whether they are willing to refund a part of their commission.Without sounding rude – I'd politely decline the business.
Cheers
Jamie
It's not rude, that's your choice. I have to say though that I'm surprised any broker would knock back that much business just because a prospective client merely asked the question…and in my case I know for a fact that you didn't.
Great brokers are hard to come and those that do a good job are worth their weight in gold. I'm not saying you should try to scrooge them out of profits, but each person runs their business differently and if some brokers are willing to part with some commissions as a means of attracting more business then that is their decision as much as it's another's not to.
Anyway, good luck to all. We all have the same goals!
Cheers
Normally do mortgage brokers have websites or PDF docs with loan comparisons on key metrics eg interest rates, annual fees, maximum LVR etc. As loans are relatively commoditized products the main variables are total costs (ir, fees etc.) and ease of application (LVR and other relevant constraints). The tricky thing I find is brokers can access different rates to what the average person can, so using online comparison websites often isn't on accurate comparison if your going to go through a broker.
Mgs4 wrote:Normally do mortgage brokers have websites or PDF docs with loan comparisons on key metrics eg interest rates, annual fees, maximum LVR etc. As loans are relatively commoditized products the main variables are total costs (ir, fees etc.) and ease of application (LVR and other relevant constraints). The tricky thing I find is brokers can access different rates to what the average person can, so using online comparison websites often isn't on accurate comparison if your going to go through a broker.Yes, most brokers would have such soft ware which compares all costs of various loans.
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
Terryw wrote:Mgs4 wrote:Normally do mortgage brokers have websites or PDF docs with loan comparisons on key metrics eg interest rates, annual fees, maximum LVR etc. As loans are relatively commoditized products the main variables are total costs (ir, fees etc.) and ease of application (LVR and other relevant constraints). The tricky thing I find is brokers can access different rates to what the average person can, so using online comparison websites often isn't on accurate comparison if your going to go through a broker.Yes, most brokers would have such soft ware which compares all costs of various loans.
But is this normally provided to the client or do brokers normally like to keep this internally as their "value add"?
Mgs4 wrote:Terryw wrote:Mgs4 wrote:Normally do mortgage brokers have websites or PDF docs with loan comparisons on key metrics eg interest rates, annual fees, maximum LVR etc. As loans are relatively commoditized products the main variables are total costs (ir, fees etc.) and ease of application (LVR and other relevant constraints). The tricky thing I find is brokers can access different rates to what the average person can, so using online comparison websites often isn't on accurate comparison if your going to go through a broker.Yes, most brokers would have such soft ware which compares all costs of various loans.
But is this normally provided to the client or do brokers normally like to keep this internally as their "value add"?
provided
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
I pay $60/month for the privilege of accessing specialist software that tracks all the latest rates, fees, charges, policies of the 20+ lenders on my panel.
I provide any necessary or requested information in the form of PDF, spreadsheets, emails etc to assist my clients to make an informed choice.
Some want a lot, some a little and some just want the job done as efficiently as possible and I accommodate accordingly.
Colin Rice | CDR Finance
http://cdrfinance.com.au/
Email Me | Phone MePerth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]
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