Those numbers seem pretty fair to me. The $3100 represents perhaps 3 days worth of effort, including traveling, researching, etc, and the $900 is for closing the sale. Hardly megabucks.
The whole thing can be done online now TFN and electronic records are all integratable. All the applicant has to do is consent for the org to access all their government bennie, tax, banking, super, spending and employment receipts together and the algo will be able to predict down to the hour when the mortgagee will default or not.
Hmm - I think the analogy to the RC church is misplaced.
However your other point is reasonable, except that TFN's can't be given to brokers. We do see them on tax returns of course, and we sit down and redact every TFN on the returns before submitting them to a bank.
Accessing tax records or information of another party from the ATO using a TFN is absolutely verboten - it's a serious breach of the Privacy Act, so your theory is kaput. We do of course access information on wages, super, bank accounts etc but all supplied by the applicant in the usual documented form. All of the above takes time depending on how well organised and experienced borrowers are. It can be very quick, or it can take a week or more.
Chris
12 Jul 2017, 12:05 PM
Are you saying $3,100 for setting up a loan application and $900pa of trailing commission on the loan itself is fair value and good for consumers?
The average loan is around $350K on memory, so the upfront will be a bit under $2000 for most brokers, maybe $1960 or thereabouts. There is actually a fair bit of work involved in completing a loan application successfully, and not all loans are approved. There is no commission for unsuccessful loan applications, nor is there a fee for all the people we talk to that don't apply for one reason or another.
The trails are paid to maintain an ongoing service to borrowers when they wish to switch, ask for a better rate, or top up a loan etc. Top ups might be for just $20K which wouldn't be worth our while, except that the trail makes it in our interests to attend to the customers needs. If the customer goes to a branch for those minor needs, the branch direct them to us.
Trails tend to stop what we call 'churn' where brokers recommend that clients regularly refinance their home, which was one of the issues in the USA which caused so many problems pre GFC.
The commission is paid by the lender, not by the borrower. The banks would love that to be changed so that instead of them paying the borrower does. That would save them money and it might drive extra business to the banks branches, but they have been busy closing branches all over Australia so they couldn't meet the needs in any case, especially in rural areas where the nearest bank could be some hours drive away.
From a customers point of view they could approach a mainstream bank and get a perfectly good loan from a bank like the ANZ at 4.04% for their basic loan, or they could approach a broker who might recommend a smaller lender such as Auswide Bank at 3.69% which would save the borrower about $100 every month in interest costs.
Under the current system people can approach a broker or they can approach a bank directly - it's their choice. But I understand your point of view, if you feel that banks are more honourable in their dealings with you, then by all means deal with them and don't use a broker when you eventually buy a place for yourself and your family.
All the best.
zaph
12 Jul 2017, 12:26 PM
Quote:
People used to pay a broker $100's and pay commissions
And they still do. This is where the smart money still is.
Clearly I'm not one of the smart brokers. I don't charge any fees for normal loan applications, and nor do other brokers I know. We just accept whatever commission the lenders pay. Mostly they all pay similar commissions.
Sometimes there are fees charged to arrange developer from non-bank lenders but these days I try to stay away from that area of lending. Way too many dodgy people, both borrowers and lenders.
Rufus, you just did a hatchet job on answering that. Forget the dribble 'baffle them with bullshite' answer, the reality is that even $1960 is an incredibly stupid amount of money to pay for a broker to setup a loan. You know it is, to argue any differently is just arrogance.
It has been proven that banks use brokers to create what are effectively fraudulent loan applications. They don't take any longer to setup or establish for the broker but the bank gets a patsy when something like a 'royal commission' comes to town. They pay high enough to ensure the broker sees the risk as worth while and high enough to ignore the fraud and somewhat normalise it.
In this day and age brokers are completely and utterly superfluous but mainly two industries use them to deceive the consumer, banks and health insurance.
All I'm getting from this thread is that Chris is angry that Rufus makes more money than him and therefore thinks the system should be changed so that everyone is more on par with Chris.
At the end of the day Chris, packing shelves at Coles is always going to be minimum wage. Nothing is stopping you from gaining qualifications to go down a different path.
All I'm getting from this thread is that Chris is angry that Rufus makes more money than him and therefore thinks the system should be changed so that everyone is more on par with Chris.
At the end of the day Chris, packing shelves at Coles is always going to be minimum wage. Nothing is stopping you from gaining qualifications to go down a different path.
Chris will never be in a position to apply for a home loan through a broker or directly with the bank so it doesn't really matter either way. The best deal that Chris can do for himself is to negotiate hard for the early release of his bond between rentals.
A competent broker will lay out all the beneficial financial options that's relevant to one's situation.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$ It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do. Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
Clearly I'm not one of the smart brokers. I don't charge any fees for normal loan applications, and nor do other brokers I know. We just accept whatever commission the lenders pay. Mostly they all pay similar commissions.
Sometimes there are fees charged to arrange developer from non-bank lenders but these days I try to stay away from that area of lending. Way too many dodgy people, both borrowers and lenders.
I think hideflect was comparing mortgage brokers to full service stock brokers and travel agents. Ie the internet has made all three redundant. Full service stock brokers still have a place, travel agents are thriving and mortgage brokers are too. Hideflect has no idea.
Blondie girl
12 Jul 2017, 02:13 PM
There is options. Shop around.
A competent broker will lay out all the beneficial financial options that's relevant to one's situation.
Rufus, you just did a hatchet job on answering that. Forget the dribble 'baffle them with bullshite' answer, the reality is that even $1960 is an incredibly stupid amount of money to pay for a broker to setup a loan. You know it is, to argue any differently is just arrogance.
It has been proven that banks use brokers to create what are effectively fraudulent loan applications. They don't take any longer to setup or establish for the broker but the bank gets a patsy when something like a 'royal commission' comes to town. They pay high enough to ensure the broker sees the risk as worth while and high enough to ignore the fraud and somewhat normalise it.
In this day and age brokers are completely and utterly superfluous but mainly two industries use them to deceive the consumer, banks and health insurance.
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