How do Mortgage Brokers get paid?
As your mortgage broker, we are so grateful for the opportunity to work with you. We are committed to continuing to look after you at present and in the future through our fee-free service.
How do Mortgage Brokers get paid?
Once we find the loan that is best suited for your needs and goals, your lender will pay us an upfront commission for the credit assistance we provide to arrange your new loan (usually 0.6 – 0.7% of the loan amount, net of any redraw or offset balance).
After the loan settles, your lender will also provide us with an ongoing trail commission which covers the ongoing administration of your loan (usually 0.1 – 0.2% of the loan balance, net of any redraw or offset balance).
The commissions we receive as your mortgage broker come with some risks to us because of current regulations. These risks mainly present to us in the form of “Clawback”.
What is “Clawback”?
If your loan is repaid in full, or significantly reduced (by choice or through the use of redraw and mortgage offset accounts, for example) within a period of up to 24 months, the lender will “clawback” or take back ALL or part of the remuneration paid to us for helping you establish this loan.
Although this varies from lender to lender, this generally happens as:
- 50% within 12-24 months of the loan settlement date
- 100% within the first 12 months
Our team at Rise High can easily spend between 20-40 hours handling an average loan from start to finish. This includes but is not limited to:
- Client meetings and ongoing discussions
- lender and product research
- processing of all application forms
- liaising with various providers (i.e. lenders, loan assessors, valuers, real estate and settlement agents, accountants etc)
- providing email updates and answering all questions you might have in regard to your loan
What this means to us under the current mortgage broking system in Australia, is that even if you are extremely satisfied with the outcomes, and we have done our best to provide an excellent service and protect your best interests, lenders can come back to us at any moment to take away what we have worked so hard for, leaving us with nothing to do to stop them.
How can you help?
We absolutely love what we do, and take great pride in providing a valuable quality service at no upfront cost to you – we most definitely would like to keep it this way!
In order to do so, we kindly request that you share with us any potential plans you might have about selling, refinancing or making any changes to your loan within the initial 24-month timeframe, to give us the opportunity to provide our best advice and assist you ongoing.
Keen to learn more about working with our Award-winning brokers? Find out more in our dedicated Rise High TV playlist!