Brokers that refund trail commission
- Thread starter Xap
- Start date
Xap I don't think you'll find many brokers willing to refund their trail commission. It's like an employer offering you a job and but telling you that you'll need to pay them for the privilege of working there. Many brokers could likely cover their business costs without the trail commission, but they wouldn't be able to pay themselves any sort of income.
I am aware of some brokers that do rebate the trail commission earned with some caveats.
1. They charge a processing fee to rebate the commission.
2. They charge a substantial upfront fee instead. Figures I've heard are $3,000 or more, plus GST.
For most loans, they earn more on the upfront fee than they would in trail over a 5 year period. It's proposed as a saving to the client given the trail rebate saves money over 30 years but this is statistically false. Most loan last an average of less than 3 years before they're changed in some manner, at which point you would no longer receive the trail rebate.
Also consider than many lenders don't actually pay trail income in the first 12 months.
Brokers offering trail rebates usually don't tell you the statistical facts around how long the average trail actually lasts. They've done their figures and have structured it so their business makes a healthy profit. Guess who pays for this profit?
BTW. Most lenders only pay 0.15% trail income these days.
I am aware of some brokers that do rebate the trail commission earned with some caveats.
1. They charge a processing fee to rebate the commission.
2. They charge a substantial upfront fee instead. Figures I've heard are $3,000 or more, plus GST.
For most loans, they earn more on the upfront fee than they would in trail over a 5 year period. It's proposed as a saving to the client given the trail rebate saves money over 30 years but this is statistically false. Most loan last an average of less than 3 years before they're changed in some manner, at which point you would no longer receive the trail rebate.
Also consider than many lenders don't actually pay trail income in the first 12 months.
Brokers offering trail rebates usually don't tell you the statistical facts around how long the average trail actually lasts. They've done their figures and have structured it so their business makes a healthy profit. Guess who pays for this profit?
BTW. Most lenders only pay 0.15% trail income these days.
Recommend XL Financial in Adelaide. He refunds comissions and doesn't mind working with interstaters via email / phone / fax etc
http://www.xlfinancial.com.au/services.html
http://www.xlfinancial.com.au/services.html
Personally I don't get why you would refund a trail.
I deal with a significant volume of SMSF loans and the space is extremely competitive, with new entrants such as Liberty offering free application fees. Yet, I know two brokers who offer a refund of trail (or part thereof). Personally, I have seen as a poster mentioned above that there is a higher application fee and higher interest rate. This may result in the consumer shopping around the find a better rate, which has occurred with a few of my client with the relevant brokers.
I deal with a significant volume of SMSF loans and the space is extremely competitive, with new entrants such as Liberty offering free application fees. Yet, I know two brokers who offer a refund of trail (or part thereof). Personally, I have seen as a poster mentioned above that there is a higher application fee and higher interest rate. This may result in the consumer shopping around the find a better rate, which has occurred with a few of my client with the relevant brokers.
There was a company years ago called "Refund Home Loans" who used to refund part/all of upfront commission.
They went broke.....
I cant see how mortgage brokers survive on their dwindling commissions now anyway, especially with the hugely increased amount of paperwork they now are required to do.
I would be looking in the other direction, and would be prepared to pay a fee to a really good broker, that can structure all my finances correctly, and give me good service, and help me grow my wealth, rather than someone just able to quote a few different lenders rates.
They went broke.....
I cant see how mortgage brokers survive on their dwindling commissions now anyway, especially with the hugely increased amount of paperwork they now are required to do.
I would be looking in the other direction, and would be prepared to pay a fee to a really good broker, that can structure all my finances correctly, and give me good service, and help me grow my wealth, rather than someone just able to quote a few different lenders rates.
Yeah, better to get the money upfront rather than slowly over 3 years.
I would say that even in that case, $4,500 saving over 10 years isn't anything to write home about... Add in inflation and lost opportunity cost of the 3k paid, you're not that much ahead.
depends on the lender, and whether they do it through someone at the branch who 're writes' the loan instead of changing it, but usually no.
I see what you are saying about opportunity cost. If instead of paying an upfront of $3K to a mb or bank I invested $3K. Assuming a 8% return or a 5% real return (removing 3% for inflation so a gross return of 5% pa) I would have the equivilant of $4886 in ten years time; a real return of $1886. So by paying the brokerage I am losing the opportunity to earn $1886.
However, this needs to be compared to the cost of paying the trail to the mb or bank. Based on a loan of $500000, trail of 1.5% over ten years the cost of this is $750 pa or $7500 over ten years. I would still rather pay the brokerage especially since there'll multiple loans in place.
However, this needs to be compared to the cost of paying the trail to the mb or bank. Based on a loan of $500000, trail of 1.5% over ten years the cost of this is $750 pa or $7500 over ten years. I would still rather pay the brokerage especially since there'll multiple loans in place.
