Banks verses Mortgage Brokers

H

househunter

Well folks it's just about time for me to revalue everything and see if I can obtain some more money. You know the situation I guess. About 5 years ago I had most of my loans through a mortgage broker who incidentally is my ex bank manager. He was great. Everytime I wanted a loan he seemed to be able to provide it. However a couple of years ago I thought I would approach my bank and see if they could do any sort of other deals and to my suprise they came up with a good offer which I accepted. All this happened very quickly and I am still happy with the result. When I told my mortgage broker that I had gone directly to the bank he was a little upset and I asked Why?


He said" because now I lose all of the ongoing commissions and may even have to pay back some of the original charges on the loan". I always understood that there were fees and charges but I hadn't realized that they receive commissions for the life of the loans. I would like to know whether somehow that commission gets put back onto the loan in the way of fees and charges by the bank. Does anyone know?

Finally I received a call yesterday from the brokers secretary asking me if I was thinking of getting another loan and I replied "yes". She told me she would get the broker to ring me when he gets back from holidays and organize a time to meet up. I still have one loan through his office. My question here is If I have a good relationship with the bank Do I really need to use the broker or are there other benefits in using one? I know this is long winded but I would appreciate your views. Thanks

Househunter
 
Househunter,

Use the approach that works best for you!

I would be somewhat concerned about using any mortgage broker who didn't declare all his income streams from your loans however. A residual stream for the life of the loan is quite common & I'm surprised you were not informed of this (not how much but the fact that there is one).

Banks factor this into their interest rates & fees....so technically a bank could offer slightly lower rates direct - but in practice they don't. Mortgage brokers take a load off bank employment & are probably much more cost-efficient than another bank employee to handle the same loans.

Cheers,

Aceyducey
 
A bank may not serve you well in the longer term. As you grow, you will have growing servicibility issues; a bank will also be anxious to cross collaterise, causing problems down the track.

But if they suit you now, stay with them until they start to say no.

And when you do start to get servicibility problems, make sure your broker is up with investors. Many of them deal mostly with owner occupiers of people with one IP- and they will not know a lot about things which can really help you as an advanced investor.
 
Hiya

Do what serves you.

Id be hesitant to work long term with a client that doesnt show me the loyalty I show them unless theres a damn good commercial reason for them not doing so.

There are instances where you will spend a dozen hours on something for a client, get it through, only to find that 6 mths later they have been restructured by the bank, you suffer a 100 % + clawback on your commissions and you have paid for the work you have done.

Often the restructure has even cost the client money, through new duties, cross coll and other "blind sides".

Its not uncommon for bank managers to attempt to pinch broker introduced business because it adds to their monthly budget, even though it doesnt add to the banks bottom line.

There are instances of where you are better served by going direct, without a doubt.

Commercial reality deems that the rates offered at bank direct level are the same as through the broker channel. With some lenders there are products that are bank only, and there are products that are broker channel only, with precious little difference between them.

Ta

rolf
 
Heya people, as far as the original post goes..your broker should have disclosed to you the percentage and nature of the commissions he/she recieves from each lender.(it's actually the law.....)

I agree with Rolf, as a broker you can spend many many hours on a deal with someone, also many deals down the track and the bank will try to pinch the business, please remember they are trained employees of the bank they represent and in so doing so are obligated to serve the best interests of the bank....not you....(but as an investor I too am aways looking for the best deal). I say do whatever you feel is the best for yourself.

Mitch
 
mitchmakhan said:
Heya people, as far as the original post goes..your broker should have disclosed to you the percentage and nature of the commissions he/she recieves from each lender.(it's actually the law.....)

I agree with Rolf, as a broker you can spend many many hours on a deal with someone, also many deals down the track and the bank will try to pinch the business, please remember they are trained employees of the bank they represent and in so doing so are obligated to serve the best interests of the bank....not you....(but as an investor I too am aways looking for the best deal). I say do whatever you feel is the best for yourself.

Mitch
Click to expand...
Trust nobody! Is that what you said?
 
Thommo,

Yes you can X-File it if you like, one thing i try to remember when taking advice is to understand where the advice is coming from...

cheers mitch
 
mitchmakhan said:
Thommo,
one thing i try to remember when taking advice is to understand where the advice is coming from...
cheers mitch
Click to expand...
I AGREE 100%
Do your own research, the banks and mortgage brokers
will try to offer you packages that meet your basic requirements but
won't necessarily offer you the best possible option.

Their reasons for offering a particular loan seem good to them
but you may have different selection criteria.

You could be looking for a low interest rate or low ongoing fees or no establishment costs. They could be thinking of the flexibility a particular package offers, low exit fees and perhaps how much they make from the deal.

I would use a mortgage broker when possible but would do my own research
to ensure that I am getting what I want and not what is on offer.

cheers
 
This is on a slightly different tangent ......

IP in Perth, WA over $150K equity - $68 loan with P+C Union, Perth.
Needed a line of credit ASAP of $50K to cover costs of a property purchase in UK.

After a week of emails, calls and explanation to the P+C, Perth - no line of credit and more "approval" for loan awaited.

One call to a bank in UK and I get a preapproved loan of 17K UK pounds, simply completed the online form and the money was in the account in 24 hrs, no upfront fees, nit picking forms or valuation costs......the interest rate for the UK loan - 5.8 %, P+C, Perth 7.3% + upfront fees of $750 !!!

I had planned to pay off the $68K mortgage on the IP in Perth and start purchasing more IP in Oz - I bought the property in UK as my wife wants the children educated privately in UK. Now that I have experienced how efficient and cheap bankong services are in UK - I am seriously considering cashing up in Oz and invsting in UK.

As a footnote, I *hate* doing banking business with 20 odd yr old gushy girls who seem to make up most of the staff at P+C, Perth. They have not got a clue how to handle old bitter gits like me...
odaat
 
First of all I'd like to thank you for your replies.

I must have had a different experience with my bank than some others on this forum. They are certainly not young uni students at the coal face. Maybe in the loans department in the city I don't know. I have an open line to my bank manager. In fact I have her personal number in my mobile phone. They are always very helpful and why shouldn't they be as there is a lot of money not only invested with them but also owing to them.

On the other hand however I do agree that it will get to the point with them that enough is enough.That's why I have decided to talk to my original broker who I still have one loan through and see what he can do. I am sure now that he understands my feelings on disclosure and will try harder to let me know. He is coming over tonight and so I will keep you posted onthe outcome. I have known him for 15 years now and I don't believe he would
ever intentionally do the wrong thing.

Househunter
 
odaat said:
One call to a bank in UK and I get a preapproved loan of 17K UK pounds, simply completed the online form and the money was in the account in 24 hrs, no upfront fees, nit picking forms or valuation costs......the interest rate for the UK loan - 5.8 %, P+C, Perth 7.3% + upfront fees of $750 !!!

I had planned to pay off the $68K mortgage on the IP in Perth and start purchasing more IP in Oz - I bought the property in UK as my wife wants the children educated privately in UK. Now that I have experienced how efficient and cheap bankong services are in UK - I am seriously considering cashing up in Oz and invsting in UK.
odaat
Click to expand...

5.8% seems on the high side. A friend of mine bought a unit in London
about a year ago and the int. rate was less than 4%. Is this a recent loan?

Interest rates in some countries are VERY tempting.
The problem I have with borrowing in foreign currency is the AUD$ fluctuation
It can sometimes be beneficial but if our $ lost value you
will have to pay back more than you originally borrowed.
Servicing the loan from Oz can be an issue too.
 
BV,
There have been about 4 x O.25% interest rate hikes in the last 12 months in UK. One more is expected this year - making the base rate 5.25%.

I am paid in sterling so serviceing a UK loan is OK for me. I was trying to take advantage of raising money on my WA IP and service the loan with sterling - I am so annoyed by the service from the P+C union - I just want to clear the remaining mortgage this year and start again with a different lending institution -

Has anybody had a good service from an Oz lending institution, I trully want to know if there is such a thing ?

odaat
 
Hiya

Try a broker that works with expats, simplify your life maybe ?

lenders will have good days and bad days, though some are consistently below par

ta

rolf
 
Rolf,
Can you PM details of expat brokers - or share on the site ?

Half the probs I face is a lack of clean information on how to structure the OPM to fund IP purchases using my expat tax free funds, my (limited)understanding of property finance have all come via Jan Somers book !!

Am I right to assume a broker can advice on a lending strategy to follow - as they get paid on a result as opposed to the P+C union who operate within a narrow customer UN - friendly criteria minus the advice and strategy consultation ?.
Odaat :confused:
 
I agree. Rolf S is a top broker. He knows his stuff and is beyond reproach.

I would have no hesitation in recommending him.
 
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