Mortgage brokers fee - How it works

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#664028 30-Jul-2012 14:59

ankit816:

Yes, I'm thinking I should shop around a bit, but its such a hassle - they all have pretty much the same listed rates, but differ as to what you might be able to squeeze them down to if they really want your business. Which basically means having the same boring interview with 3-4 different banks. It probably pays off over time, a .25 difference adds up on a big mortgage over the decades, but, as is always the case, laziness pays off right now!

A bit of hassle for sure, but even .25 on an avg 400k mortgage means a free iPhone every year!
Perhaps use a broker to save yourself the hassle, they generally visit you once and do the rest on your behalf. Also, somehow banks apparently offer them better rates then they would if you do the hard work and go direct.

True, but then I have to do due diligence on mortgage brokers and find one that doesn't rub me the wrong way and/or/by come across as a slimy shark. Which means having the same boring interview with multiple brokers, who are guaranteed to be much more annoying than bank managers at phoneing back and hassling me at regular intervals once I'm in their databases. </eeyore>

callumb

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Devoli

#664038 30-Jul-2012 15:18

I just negotiated some pretty amazing rates directly with the bank myself - we used a broker to get the mortgage originally, but I just emailed the bank (Sovereign) and said i could get better elsewhere - and they gave me some amazing rates - if you dont ask the question, you dont get...

ankit816

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#664039 30-Jul-2012 15:20

Would we be helping each other by revealing our rates or is it ethically wrong? I am confused

Ankit

callumb

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Devoli

#664042 30-Jul-2012 15:26

ankit816: Would we be helping each other by revealing our rates or is it ethically wrong? I am confused

Not sure, but I PM'ed you what I got offered.

ankit816

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#664044 30-Jul-2012 15:29

callumb:
ankit816: Would we be helping each other by revealing our rates or is it ethically wrong? I am confused

Not sure, but I PM'ed you what I got offered.

Appreciate you sharing the info. Helps me in setting my sites more aligned to prevailing market then be over ambitious after hearing every one saying - They got amazing rates but without actually telling the numbers. Imaginative numbers can be far from reality

Ankit

wallop

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#664047 30-Jul-2012 15:32

I don't see naything wrong with posting what rates you get here. Your not getting any benefit yourself by doing it. If you go a good deal on a tv or phone would you have a problem giving the details here?

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ankit816

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#664049 30-Jul-2012 15:34

wallop: I don't see naything wrong with posting what rates you get here. Your not getting any benefit yourself by doing it. If you go a good deal on a tv or phone would you have a problem giving the details here?

I would have no problems at all. Happy to share and get fellows here save $$ instead of letting fat banks add more calories on them .

Ankit

BlueShift

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#664051 30-Jul-2012 15:38

I see no ethical issues with sharing what you've negotiated with your bank, unless they talk you into signing an NDA. It definitely makes life easier for others knowing a ballpark of how far the banks can be talked down from their billboard rate.

Dynamic

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#664112 30-Jul-2012 17:22

I have worked with a few mortgage brokers over the last few years.

They used to get a smaller up front fee and a 'trail commission' for the life of the loan. To get into the broking business you had to have some ca$h to keep you going for the first few months until the trails started to build up. I understand these trails are now a thing of the past and there is an up front fee only, though I have no idea how this is calculated.

The net effect is most likely that a broker will be more keen to negotiate with a new bank than an existing one. Helping you renegotiate an existing loan facility gives them no financial reward.

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networkn

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#664117 30-Jul-2012 17:30

Jaxson:
ankit816: I also don't want the broker to loose his fee coz I know he has spent the time to come meet me, submit my application to another bank etc.

Take a step back here and don't get to emotionally involved. Those costs are part of the broker doing business, whether the deal goes ahead or not. It's your money and future you're talking about, so hurting the brokers feelings is rather insignificant and you don't owe them anything.

Also them applying on your behalf doesn't take much in the grand scheme of things. Watch out for this too by the way, as if a broker applies for credit with multiple lending institutions, (including the more dodgy options), 'to get search out and get you the best deal' then this looks very bad on your credit history. It reads as if you were desperate for money and tried everywhere, as if you were declined at each one. Just keep a close eye on what they do on your behalf.

(Last I heard brokers don't get paid until you've been with the bank for 1 year.)

I would like some evidence to support your claim that shopping around for finance would affect your credit rating.

Peppery

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#664138 30-Jul-2012 18:20

networkn:

I would like some evidence to support your claim that shopping around for finance would affect your credit rating.

More credit report enquiries = the lower your score will be.

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networkn

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#664141 30-Jul-2012 18:37

Peppery:
networkn:

I would like some evidence to support your claim that shopping around for finance would affect your credit rating.

More credit report enquiries = the lower your score will be.

That's not evidence.

Jaxson

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#664164 30-Jul-2012 19:34

networkn:

I would like some evidence to support your claim that shopping around for finance would affect your credit rating.

Ask IlDuce

http://www.geekzone.co.nz/forums.asp?forumid=48&topicid=68365

cldlr76

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#664295 30-Jul-2012 22:36

I'm paying .74 less than the carded rate on my floating mortgage and .25 off my fixed rate mortgage. Negotiated it myself and it took about 10 minutes to organize.

astrial

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#664390 31-Jul-2012 10:02

I think this is an issue that more people should be able to review so I'm going to add my two cents (rates) here. We took out a mortgage in April so this is a bit old and probably at the start of the so-called 'mortgage war' that is apparently occurring at the moment.

Note that banks will take into account your personal circumstances such as salary, LVR and risk when offering discounts on rates.

We have 5.14% floating at the moment, which is 0.46% off carded rate with our bank. My understanding is that most of the time banks offer this for a period, say 2 years, before you go back to the standard carded rate. Our discount is for the life of the loan (which confused our lawyer no end).

I have heard some people (probably high equity) are getting less than 5% on floating rates at the moment.

We also have 5.5% fixed for 3 years, which is about 0.4% off carded but I would definitely expect to receive better than this at the moment.

Edit: we negotiated this ourselves but I have a friend at a competing bank who was able to provide me with very good quotes to shift business to them at the time we had signed on the dotted line with the house, but had not arranged the specifics of the finance with the bank we had pre-approval with.

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