Mortgage Broker Problem

[In The Red]

Hey there.

My query relates to the actual loan agreement when using a mortgage broker. Here are my thoughts:

- my mortgage broker has only contacted me once since I raised queries regarding my interest rate. My loan is with ING and the broker is here in Melbourne.

- I am a broker in the insurance industry and I know that in our industry, where a broker fails to provide a service acceptable to their client, the client will typically appoint another broker to take over the policies the previous broker has arranged. At the end of the day, the contract (insurance policy) is between the insured and the insurer; the broker is not a party to the contract.

- Based on the point above, I am unsure whether I can simply appoint the business to another mortgage broker for them to run with my existing loan. No need to refinance at this stage but will need to in the next 6 months so would like to be able to begin speaking with a broker who has a genuine interest in MY affairs.

Look forward to the replies.
Thanks.

 

[willfong]

I had a mortgage brokered home loan when I purchased my PPOR 4 years ago and refinanced the loan with another bank directly earlier this year. You are under no obligation to use your old broker if you wish to refinance your current loan with another lender. It's between you and the new lender, but if you wish to refinance with your existing lender then it might be different depending on the contract between the lender and your current mortgage broker, I have no first hand experience in that case but I am sure someone else on this board will be able to help you.

 

[Peter_Tersteeg]

Hi In The Red,

For another broker to help you with follow up service on your existing home loan, they will need to re-originate the loan (basically refinance it). Unforutanately ING does have exit fees on most of their products within 4 years.

If done correctly, a broker may be able to re-originate your loan within ING and not incurr exit penalties, but you'd be well advised to observe this closely.

Brokers receive a trail commission and I firmly beleive that this means some sort of after sales service. An enquiry about your interest rate after the fact is something your broker should definitely be doing for you.

Did your broker have you sign a 'brokerage agreement'? This should state clearly what your interest rate is. I've had cases myself where the rate I quoted wasn't the rate the customer got and I've compensated the customer directly. We all make mistakes, but clients shouldn't be the ones to pay for them.

 

[In The Red]

Thanks for the replies. I don't recall signing a brokerage agreement so I should be OK. Also, my ING loan would have been in place for 4 years next month so the timing is good in terms of avoiding exit fees.

And yes I agree on the point that there should be an after sales service given the broker is still receiving income from my loan/s. The loans total around $430K so without knowing his exact commission rates, I am guessing he would have earned enough out of me to warrant some customer service.

 

[willfong]

Off topic but how do you find ING so far? I am going to have a new loan with them (for 5 years fixed at 8.19%, their current variable rate is 7.9% or 7.79% after 0.11% discount for new loans over 300k) based on the recommendation from my broker as my current bank (homepath) won't lend me enough for the purchase of an IP.

 

[Peter_Tersteeg]

The brokerage agreement actually protects you as it spells out the details of the loan you're getting. It's really more of a disclosure. It is unlikely that you were given one as they were used much 4 years ago.

Willfrog the ING deal is usually fairly good, but right now 8.19% is not the best fixed rate out there. There are a few lenders at the moment with generous serviceability and better rates than ING, although this could change (again) at any time.

 

[In The Red]

Off topic but how do you find ING so far? I am going to have a new loan with them (for 5 years fixed at 8.19%, their current variable rate is 7.9% or 7.79% after 0.11% discount for new loans over 300k) based on the recommendation from my broker as my current bank (homepath) won't lend me enough for the purchase of an IP.

Good question Willfong. The loan as such as fine but it is the rate I am unhappy with - hence my raising the query with my broker to look into the rate. My loan is $430K and the current rate (which is now variable) is 8.25%. If the loan was fixed at a rate I was happy with, then I would have no issues with ING at all.

Anyway - the plan is to refinance early next year.