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Sigh.
The trail isn't coming out of your repayment, as the repayment figure is the same whether broker or branch originated.
The idea behind a trailing commission is that the client has the ongoing relationship with the broker, not the bank. Post settlement support is heavily time consuming and costly, minor top-ups, switching, rate reductions are a cost exercise, hence the need for trails, otherwise any loan written would become an ongoing liability, or a zero support structure.
The commission payments are compensation for the value provided to the lender, in that their client find, loan processing and data entry is completed by a broker, reducing their staffing requirements. Why do you think banks SHOULDN'T pay for receiving this financial benefit?
In the end this is a market economy, if there is a market for the product, it will be provided. There are providers out there who provide similar options, feel free to take them instead of using the services of brokers who gain their businesses through their extensive structuring knowledge and advice, not paying you $14.26 per month.
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.
No. It's not.Yes but surely the .15% trail is loaded onto the interest rate.
Yes but surely the .15% trail is loaded onto the interest rate. At the end of the day the borrower pays not the banks.
But going direct to a bank is not going to result in a lower interest than compared to a broker.
My broker did this.
I'm on a 1.05% discount with major bank, their staff rate is less than that, they match, genuine under the counter offers in writing and discount from time to time under there staff rate,usually bom the last few year
Brokers provide a fantastic service to clients, if your interested in saving cash go to u bank or one of those pi$$y lenders don't complain though when your tax is fu xxxed and you can't borrow anymore or your settlement delayed, ring the answering machine service.
Also, i bought land from a liquidator, unconditional 14 day settlement, gave it to my broker, he made this bank settle in 10 days from the day I signed contracts. How good is that, on the above discount. Do u get that with u bank, or going to the bank yourself.i think not. Paying whatever trail from a 1.05% discount is nothing to me! for that service
Horses for courses, every loan I do going fwd will be through my broker, simple as that.
That's my experience with my broker, he's not a poster on this forum, but I'm sure the gents who post are just as good and motivated,thats what it comes down to,motivation and love of the job, if these gents didn't like what they did, they wouldn't be here after hours and weekends posting.
Rant over
I have over AU$1m in loans so my broker must be getting a decent trail but I don't like him anymore so if I refinance will he lose his trailings?
I guarantee you it happens all the time.
I have over AU$1m in loans so my broker must be getting a decent trail but I don't like him anymore so if I refinance will he lose his trailings?
Is it just me or has anyone else noticed that this is pretty much the one and only thread on here where no one has fallen over themselves to recommend to the OP to seek the services of any of the many excellent mortgage brokers on here?
OP - you can interpret how you wish...
I guarantee, you have no idea on what you are on about
No, you guaranteed that all of the time you would secure a better rate if you went through the branch network.
That statement is not true