Monday 14th March 2016Do Mortgage Brokers Receive Commissions?
Australia has been a home for mortgage brokers. Regardless if they are working for a firm or individually, they are there to guide people like you who want to loan from banks or other credit institutions. Because of their experience and knowledge about existing lenders and how to negotiate with them, they are needed by borrowers to take care of the paper works and get the most suitable arrangement for their income and lifestyle.
Getting a mortgage broker is a good choice if you want to get a loan with the best rates you can get. Most of the time, borrowers are not able to get better deals if they go alone to the lender because they can only get retails. But with the help of a mortgage broker, borrowers can avail wholesale products, which are more practical than the retail ones. In addition to that, mortgage brokers can give you more tips like properties to invest in if you are loaning for an investment loan.
Am I Secured in Getting a Mortgage Broker?
If you will read reviews from borrowers, some of them have negative feedback while others have had good experience with mortgage brokers. Negative feedback from borrowers are often about unexpected payments or fraud brokers. This happens if the borrower did not give full attention to all the written agreements signed or there was no background check and confirmation of the broker’s license.
If you want to avoid problems when using the service of a mortgage broker, you must make sure that you are working with a certified broker. Their license is your main assurance that you can go after them when they take advantage of you or do anything illegal against you. You can easily sue them or file for a suspension of license if anything chargeable happens while the broker is working for you.
Also, to prevent unwanted payments at the end, you must always read and understand everything in the written documents you are signing. Before you sign, ask the mortgage broker about things that you do not understand and clarify if there is any mortgage broker fee.
Why is the Service of a Mortgage Broker Free of Charge?
In many cases, mortgage brokers are not paid by the borrowers who use their service that’s why brokers are seen to be helping for free. In fact, they are not working for free. Someone is paying for the service they give to the borrowers.
Mortgage brokers are getting commissions from the lender every time they close a deal or the loan application of the borrower is accepted. They are often paid by lenders with either one-time commission or lower commission but with trailer fees. For one-time commissions, mortgage brokers receive a percentage of the total amount of the borrower’s loan. They typically get around 0.50% to 1.2% of the loan. The percentage is dependent on the type of loan products they sell and their agreement. For instance, a mortgage that needs to be paid for 10 years will give the broker a higher commission than mortgage products needed to be paid for 5 years because the lender will earn more for mortgages with longer span.
A mortgage broker can also be paid by the lender with lower commission but will still continue to receive payment while the mortgage is not fully paid yet by the borrower. This happens when the agreement between the lender and the broker considers trailer fees, wherein the broker will receive a certain percentage of the loan yearly, while the loan is not fully paid yet. For example, if the span of a mortgage is 10 years, the broker will receive a certain amount of commission when the loan application is accepted and will be paid yearly for the next 10 years. With this kind of commission, the broker will have a stable source of income (yearly) for 10 years. In case he decides to quit on being a mortgage broker, he can sell this arrangement to other brokers.
Do Borrowers Have to Pay Mortgage Brokers?
The payment for mortgage brokers differs, depending on the conditions of the broker or his firm. Mortgage brokers who are paid with commissions are just the typical way they are paid. Not all mortgage brokers are paid this way. You may wonder why there are mortgage brokers whose service is free of charge while others have fees that the borrower has to pay. Different brokers set different terms and conditions that’s why you can find brokers with fees.
There are mortgage brokers or firms that require borrowers to pay a certain amount of fee as their payment to the service. Some of them have fixed rates while others are paid per hour, from the moment they accepted the job until the loan is accepted by the lender. There are also mortgage brokers who charge borrowers with a certain percentage of the total amount borrowed. The percentage, like when brokers receive commissions from the lender, depends on the type of loan the borrower gets.
Where to Find Reliable Mortgage Brokers?
While there are different ways mortgage brokers are paid, it is important for the borrower to make sure that the payment is clear. As a borrower, you need to make it clear if the broker will be paid through commissions or if you have to pay certain amount of fees to prevent unanticipated payments. Before agreeing and signing with the broker’s conditions, make sure you understand everything. If there are things unclear to you, ask the broker to elucidate the terms. If you are not confident that the broker is telling you everything you need to know, take time and ask for other’s opinion before you sign the agreement.
Mortgage broker firms are seen as more reliable than individual brokers because they are easier to sue if illegal things happen. 1300HomeLoan is a reliable firm where you can choose from a long list of certified brokers. You can choose a broker whose expertise is the type of loan you want to get and is residing near your place. Browse our website or call us to start getting your loan with the help of the best mortgage brokers.