Broker Made Us Sign Agreement That She Gets $3k if We Change Bank within 3 Years

Lfunkybits on 11/03/2023 - 13:27
Last edited 11/03/2023 - 14:27 by 1 other user

Hey all,

After filling out paperwork etc as part of the full process with our broker 18 months back I stupidly said we might be selling in a few years and this triggered her demanding we sign an agreement that she gets a $3k payment if we cancel our mortgage within 3 years.

We now find ourselves on a crap rate of 6.19% ($230k investment loan P&I) and looks like if we move we could achieve sub 5%.

My feelings are it was unethical to bring that $3k agreement in midway into dealing with her and she can try and sue me for the $3k if we move banks.

Interested to hear others views on if this is normal practice etc and enforceable.

Cheers

Financial Home Loan Loan

Comments

  • randomusername2017 on 11/03/2023 - 13:36
    +131

    Broker made us sign

    How¿?🙆‍♀️ 🔫

    • Nugs on 11/03/2023 - 16:49
      +45

      Gunpoint surely
      .

    • pharkurnell on 11/03/2023 - 17:00
      -3

      Bikeies…

    • infinite on 12/03/2023 - 23:29
      +5

      Yeah, OP is clearly making this nonsense up.

      As if you wouldn't just say no.

    • AustriaBargain on 11/03/2023 - 13:42
      +37

      Sounds like you have to pay her penalty. You could move your loan and just hope she or her employer forgets about the provision? Or you could tell her you can save $5k or whatever by moving and ask her if she wants to help you save money without moving.

    • onetwothreefour on 11/03/2023 - 13:43
      +1

      So 3k is a small price to pay to have avoided all the hassle of shopping around.

      • cookie2 on 11/03/2023 - 15:28
        +1

        I'm assuming you're being sarcastic?

        • onetwothreefour on 12/03/2023 - 08:54
          +23

          Yeah, he chose not to shop around and just accept what this broker was quoting and he knew it would cost him 3k to change so no point in whinging now.

    • silenthillrocks on 11/03/2023 - 14:00
      +50

      Find a new broker. Seriously

    • SydStrand on 12/03/2023 - 10:38
      +4

      It sounds like that broker completed the so-called 'poop load' of paperwork and saved you a headache, and now you think they shouldn't get paid for their work.

    • drfuzzy on 12/03/2023 - 16:52
      +1

      tell me more about this palava

      • kiitos on 13/03/2023 - 08:27
        +4

        It's a kind of desert

    • DangerNoodle on 12/03/2023 - 17:32
      +7

      It might be due to the payment deal that the bank has with the broker. Most brokers (as far as I know) don't get paid a lump sum from the banks for sorting out a deal for you, banks will usually pay over time and selling the house would stop their payment as you would be ending the loan with the bank.

      Seems fair to me that the broker should get paid for doing their job. Heck, i'd feel bad for my broker, they had to go through a crap ton of work for me due to unexpected issues but they managed to get everything sorted. I know the deal for mine meant my broker just gets trickle fed from the bank.

      • Matt P on 13/03/2023 - 18:46
        +5

        Most brokers still get a lump sum and then a much smaller monthly trail. If the loan is refinanced within a period (usually 12-18 months but some lenders are longer) the lender can claw back as much as 100% of the upfront commission.

        Whilst i disagree with their business practices, i sort of understand why they do it. A good broker doesn't need to do it though because if they're any good at their jobs, you'll be calling them to help you change lenders if you're not satisfied with the current one or they will be calling you every 3-6 months to see how you're going and if you're still happy with your current lender to catch you if you're thinking about changing.

        Anyway, call the retention team of your bank asking about discharge forms and that your broker/new bank has asked you to call them. Most will ask you why you're leaving and try and keep you. Find a deal on someone else's website that is more in line with what you're after (don't make claims about deals that aren't true/aren't available to you, they may check if the offer you're claiming is a current offer) and tell them that's where you're going. I'd be shocked if they didn't counter offer

        Once you hit that 3 year 1 month mark, find another broker.

        Source: was once a broker, currently have a side hustle auditing brokers for compliance.

    • exxonsign on 13/03/2023 - 12:53
      +1

      Don't understand the negs here …. it may well be that OP's instinct is correct if the post-Royal Commission changes apply to the loan. In reality, if the "clawback clawback" was in fact unenforceable because of the new NCCP Regs, then exerting pressure like this on the OP to agree to something unlawful has the potential to be very problematic behaviour. If the broker is acting as a credit rep under someone else's (i.e. the Bank's) licence, and pulling this stunt to jam the clawback into all her loans, it may end up being seen as a reasonably big deal by that licensee in terms of legal and compliance risk.

  • fredz0r on 11/03/2023 - 13:41
    +4

    Where can you get sub 5% investment loan?

    • funkybits on 11/03/2023 - 13:51
      +2

      Ubank

    • MrThing on 11/03/2023 - 14:55

      oh Investment

      well most people just lie and say its OO loan anyway right?

      • burningrage on 11/03/2023 - 15:01

        Ooh? Is that possible? I mean during your loan application, you would have declared your rental income from your previous lender so it's kinda hard to say it's OO when they see that cash inflow.

        Unless this is the first investment property using the 6 months moving house PPR exemption.

        • MrThing on 11/03/2023 - 18:31
          +1

          what's to say your not refinancing or buying to move into as on OO? and the current place is going to be your rental after you move in?

          the hard part will be is, can you service the loan without the bank taking into account any potential rental income from it?

      • bohn on 11/03/2023 - 15:41

        don't they ask for electricity bill etc?
        that's what they've done for me

        they also want a copy of licence front and back from memory - so you'd have to have the old address there.

  • Settero on 11/03/2023 - 13:41
    +40

    I don't think it's ethical to sign something that you have no intention of honouring.

      • Hybroid on 11/03/2023 - 13:57
        +70

        She didn't change the rules as nothing was agreed.

        She negotiated with you before anything was signed. In the same way you could have negotiated back.

        There's a big difference.

        You signed a contract accepting those terms.

        • AngoraFish on 11/03/2023 - 14:45
          +74

          It's a classic drip pricing scam though, with a bit of bait and switch in there as well.

          Lead the client along until they've invested so much time that it's no longer easy to get out, add in a bit of time pressure to discourage them from thinking about it. Sure, buyer beware and all, but let's not pretend that she didn't change the rules either. She shifted the rules in her favor late in the process to take advantage of a stressed and naive buyer. That's how pricing scams normally work.

          The TPA probably won't apply because real estate, but consumer affairs protections exist precisely because of this kind of behaviour.

          • Settero on 11/03/2023 - 15:41
            +5

            @AngoraFish: Ah , this would not be an issue with 99% of loans , 3 years is relatively quick for a refinance and the broker changed the terms when they got new information, this looks like broker wanted out if they wouldn't make the commission if op left within 3 years , not a bait and switch circumstance.

          • jrvb42 on 12/03/2023 - 12:00

            @AngoraFish: Ah, but the broker has also invested time. I am sure if OP threatened to walk away, or better yet just did because of this (to gently encourage broker not to try it on with next client), broker would have changed her mind.

          • adante on 12/03/2023 - 18:31
            +3

            @AngoraFish: I don't have any substantive contributions to the direct topic @AngoraFish but just wanted to say it's nice to get a perspective that has a bit more nuance than its-the-contractual-law-end-of-story.

            Sounds like it is a bit of an up hill argument to make but maybe you can take some solace from the fact some do appreciate it.

      • silenthillrocks on 11/03/2023 - 14:04
        +10

        Its not. refuse to sign or find a new broker.

      • AustriaBargain on 11/03/2023 - 14:08
        +2

        If the ink was still in the pen then there were no rules yet.

      • pharkurnell on 11/03/2023 - 17:01
        +7

        you should have walked away.

        The end.

      • Poor Ass on 12/03/2023 - 11:00

        You call midway 18m ago when it just started?

  • CauseNEffect on 11/03/2023 - 13:45
    +2

    Just pay the fee IF you move… not worth the headache.

    • Mokr on 11/03/2023 - 14:05
      +2

      I'd say trying to get a premium ce beat at office works is the same level of headache

    • goraygo on 14/03/2023 - 14:56

      Why? Just move with his feet and go to another broker and tell the new guy to do exactly the same thing they planned to do.

  • parsimonious one on 11/03/2023 - 13:46
    +16

    My understanding is that brokers earn their fee from the lender

    Often the broker only receives the fee after the borrower has been with the lender for a period of time

    Therefore it is likely that if you move lenders the broker will not receive the fee from the lender, as such there is a clause that you have to pay a fee for early termination so that the broker will not be left empty handed for their work in arranging the loan

    • Nebargains on 12/03/2023 - 15:20

      Was talking to a broker the other week and asked how clawbacks work etc. He said that if you discharge the mortgage within 18 months typically the lender will clawback the fee the broker got, he said after 18 months most don't bother. As for 3 years, I believe they get a fee for year 1, then another but smaller fee in year 2 and then a smaller again fee in year 3, pretty sure it is based on amount owing on the mortgage so if you had the entire thing offset they would get nothing (ever had a broker ask you not to move funds to your offset for a few days? That's why, they want maximum fee).

      Honestly I'd be surprised if it added up to 3k unless it was a pretty large loan.

      • od810 on 12/03/2023 - 16:31

        My friend who is also my broker said usually 2 years. The upfront commission is the largest, the trailing is not so much.

        • Wasabi Ninja on 13/03/2023 - 16:28
          +2

          My friend who also a broker said he loves Palava.

      • Joku on 13/03/2023 - 16:31

        Brokers typically get a large upfront commission and a smaller annual trailing commission. The bank will claw back the large upfront commission if the client leaves, and as already mentioned I think 2yrs is more normal than 3yrs, maybe some banks do 3yrs or maybe this broker is just trying to double dip.

        Regarding the suggestion that 3k would be for a large loan, not really. Commissions are fairly high. I forget the percentages now but I remember right I got something like $6000-7000 back from my broker when I got my home loan 10yrs ago, loan was around ~$740k but the commission might have been the sum of that loan and a refinanced $380k IP loan, so maybe it was for $1.12mill. That was the full upfront commission from the bank, there is no doubt about that part because we half owned his business at the time and did his books & accounting and got the commission reports directly from the aggregator middle man business that sits between him and the banks).

        The annual trailing commission is something small like 1/10th-1/20th the percentage of the upfront commission, although I think he was able to choose between this model and an alternate model with less upfront and more trailing than what I'm describing here. Beyond that smaller %, the trailing commission reduces only because the loan balance reduces.

        This loop may have been closed, but the banks never used to claw back the upfront comission if you put a large lump sum into your offset account immediately. For example, I offset 40% of my loan immediately after getting it, and then increased that gradually over the first 18 months up to about ~75% offset. My offset balance has never fallen more than 0.5% and on average gradually increased from that 18month point but only very slowly because we dropped back from dual to single income family. Despite our loans being largely offset at all times, the bank never clawed back any of the upfront commission.

        Lastly, I think it was someone elses comment that mentioned 3yrs is not a long time to be holding a loan anyway. Churn rates are actually a lot higher than I'd have guessed. It also greatly depends on how the banks are fiddling with their loan rates over the period. Most banks will gradually screw their existing home loan clients over harder and harder over the first couple of years, and sadly the fact that they get to claw back the commission they paid to the broker is part of their risk/reward equation while doing so.

        • Matt P on 13/03/2023 - 18:53

          Lenders have caught onto large offset balances now.

    • infinite on 12/03/2023 - 23:44
      +3

      The standard way they get paid is that they earn an up-front payment for securing the loan once it's executed, then they earn a small annual "trail" commission payment each year for every year the customers stay with the lender after a 2 or 3 year period. The trail payment is relatively small, but after working for about 10+ years as a broker, that accumulated number of trail payments from the sheer number of customers referred on to lenders can easily balloon way above their yearly wage to a figure well over $250K a year. If they intend on working their entire career as a broker, they can effectively retire anything up to as young as 50yr's old, knowing they have a significant enough "trail" to last them into official retirement.

      The challenge for many of the brokers though, is that most banks and lenders require them to put through a minimum number of clients / loan applications every month, otherwise they wont allow them to submit loan applications through their broker business channel at all. So the motivation for brokers is not actually to find the customer the best loan possible using their commerce and banking knowledge, it's to convince as many potential customers as possible by using their marketing skills that the lender they inevitably pump all their clients through is the best possible option for them - even though it's almost always not.

      • kiitos on 14/03/2023 - 16:21
        +1

        Wow, thank you for this.

  • resubaehtgnolhcs on 11/03/2023 - 13:53
    +11

    These posts were people regret their decisions are starting to become long in the tooth …

    • funkybits on 11/03/2023 - 13:56

      Im not regretting, im sussing if it was nornal etc to ask a client to do this as part of a broker deal. She would not have asked us to sign if we did not mention we were just considering a potential sale

      • Gunnar on 11/03/2023 - 15:16

        No, not normal at all to do that from my experiences. I think you have to just cop it on the chin or if you want, seek legal advice.

        If I was in your position for how much you’re paying for legal advice it’s not worth it (unless you really feel strongly about the point). I’d put it down to experience

      • Geryatric on 11/03/2023 - 15:48
        +2

        Standard practice. If you leave within a certain period, the broker loses between 25%-75% of their commission with the bank.

      • JIMB0 on 11/03/2023 - 16:58
        +5

        Classic case of volunteering too much information. Did you also tell the real estate agent how much you were able to borrow as part of negotiations?

        • Kangal on 13/03/2023 - 09:17
          +2

          I thought you were meant to volunteer as much info as possible to the broker, for them to get a loan that's cheapest and best for for you.

          The REA i get. Is there something I'm missing?

      • Mokr on 11/03/2023 - 17:33

        Spilled milk fallacy

      • garetz on 11/03/2023 - 16:51
        +21

        That is not reasonable advice, that is deluded advice based on a deluded mindset. You think its reasonable because it benefits you and you are biased to want an outcome that you agree with, however you agreeing with it does not in any way make it reasonable.

        You made an agreement, the broker has no reason to accept less than was agreed upon. I am sure that number is based on losses they would incur if you cancelled your loan or moved elsewhere.

      • gromit on 12/03/2023 - 10:26
        +11

        That is insane advise, borders on blackmail. you signed a legal agreement, they have absolutely no reason to settle for less. The time to protest the agreement was BEFORE you signed it. At that time they probably would have negotiated a smaller fee to keep the business.

        • gyrex on 12/03/2023 - 13:00
          +5

          This doesn't border on blackmail, it's the textbook definition of blackmail.

      • PVA on 12/03/2023 - 11:52

        No it doesn’t.

      • JelIyfish on 13/03/2023 - 15:45

        How is reneging on what you signed fair and reasonable?

    • gyrex on 12/03/2023 - 10:43
      +7

      This is a great way to add a blackmailing charge and open yourself up to civil defamation proceedings thereby digging oneself a deeper financial hole. Not only is this terrible advice, it's utterly unethical.

      • CanadaAye on 12/03/2023 - 15:49
        +4

        Post a review and mention that after completing all the paperwork she added a last minute agreement that will force you to either stay with the initial lender or pay a fee to the broker. Let that be fair warning to others. In the meantime you signed it, so you should honour it, you'll have to factor that cost into any considerations for switching.

  • SmiTTy on 11/03/2023 - 14:12
    +23

    Firstly give your bank a call and ask them to reduce their rate. That's the easiest and quickest way. The market is quite competitive so they may be able to do something even if it's not the most competitive in the market. This doesn't constitutes moving.

    Secondly discuss with your broker and let her know there are better rates on the market and would like to refinance. She may be able to help you refinance to a better deal (cos she will still get paid and it's also in her interest that you stay a happy customer)

    If she doesn't… leave reviews of your experience on review sites (altho… You shouldn't have signed the document too! )

  • GourmetFoodie on 11/03/2023 - 14:13
    +4

    You signed the doc. It’s legally enforceable. She didn’t make you sign under duress. You admit it was your own laziness that made you not push back. I can guarantee she would have done the loan even if you refused to have that part in the contract! No broker in their right mind would refuse the new business. She’s already done the heavy lifting by that point in finding you the best rate, usually she gets the cut from the bank straight up or if it’s staggered it would still be worth her taking the risk that you’re not going to move. She absolutely played you.

    You could try the play above where you offer 50% as what’s the harm but she sounds like a shark so she’ll probably poker face you and also what’s to stop you from leaving a bad review after she’s released you from the contract…

    Your best bet is to probably Pay the fee and move on. Most banks have cash back offers at the moment. Switch and get the cash back to pay her, then switch again for the best rate (check if there are any time clauses to get the cash back though).

    • Mokr on 11/03/2023 - 17:36

      It really depends

      I can understand some penalities but 3k seems stiff.

      I wonder if it's a breach of their fin terms or duty.

      In any case it would have to go to small claims court for the broker tho get back there money.

      • GourmetFoodie on 11/03/2023 - 18:02
        +4

        Pretty sure they can put whatever terms they want in the contract…most people would have laughed in their face and walked away at the suggestion of a $3k break clause.

        • tomleonhart on 11/03/2023 - 19:50
          +3

          I always used to put that I will charge the same amount of upfront commission to the client if they trigger a clawback.

          Upfront commission is usually varies around 0.65% of the total loan amount so on a 500k loan, it works out to be $3250. Don't know how OP's broker structure her business but 3k isn't that much.

          • GourmetFoodie on 11/03/2023 - 21:44
            +2

            @tomleonhart: I’m amazed people signed it….I’d never but I’m not your standard client and I rarely accept contracts without making changes to terms - that aside, how many did you actually chase who broke that contract term?! The more I think about it, it’s hardly enforceable! How many brokers are really going to engage debt collectors or lawyers for $3k?!

            • tomleonhart on 12/03/2023 - 01:13
              +3

              @GourmetFoodie: 99.5% of my old client are reasonable as i made it clear that the loan I have arranged for them is the best at the time. Usually I give them a list of all available products on the market so they can check themselves. The odd clients that says they don’t want the clawbacks clause, my response would be thanks for your comment but I don’t work for free.

              Having said that, To be honest the odd clawbacks that happened, I just let it slide as I’m too busy doing work for other clients. I could engage debt collector but the amount is too minuscule. I do get annoyed if the client refinanced within 6 months but longer than that, meh.

              • pragmaticguy on 12/03/2023 - 16:21
                +1

                @tomleonhart: In that case isn’t it easier to just explain in one paragraph to the client how it works for you to get paid instead of having the clawback clause…? I believe vast majority of people would be reasonable and honour the requirements for you to get paid

                • tomleonhart on 12/03/2023 - 16:51
                  +2

                  @pragmaticguy: You have to have the clawback cause page with the client signature otherwise you end up with people like OP saying they haven't seen it. Heck even with OP signed the clause in black and white, he/she still denies it. Can you imagine not having it in writing?

                  My standard practice was to explain to the clients how I get paid, then when it comes to the credit contract, I sit with them and explain every single page that they have to sign. Which also involves the clawback cause page which is presented as an invoice.

  • CurlCurl on 11/03/2023 - 14:14

    Officer I didn't mean to shoot my wife. She made me do it.

    • MS Paint on 11/03/2023 - 14:48
      +7

      That's ok son. I'm married too. I understand completely.

  • tomleonhart on 11/03/2023 - 14:51
    +25

    ex broker here. Pretty sure with or without you mentioning the fact that you might sell in a couple of years time, she will get you to sign that regardless. It's a normal practice.

    If you repay the loan the broker have arranged for you (usually within 2 -3 years), the bank will claw back the commission that the broker gets which essentially means they've worked for free. Nobody wants to work for free.

    • Mokr on 11/03/2023 - 17:37
      +7

      So basically you didn't refinance your clients for three years.

      Bascially going for a broker sucks. You miss out on cash backs

      • tomleonhart on 11/03/2023 - 17:41
        +1

        It's up to the client to decide if going to a broker sucks or not.

        Most of my client were happy with a timeframe of 2 years to refinance and they get a cashback from the bank (if available) and a cashback from me which they don't get if they go straight to the bank. win - win.

      • trapper on 13/03/2023 - 10:07
        +1

        Bascially going for a broker sucks. You miss out on cash backs

        I got my last loan through a broker and still got my cash back.

    • foxmulder on 11/03/2023 - 17:38

      Didn't know it's standard practice. Didn't pay attention what I signed 7 years ago :). It means for op to not sign this thing he or she should go to the bank directly to apply for home loan.

      • tomleonhart on 11/03/2023 - 17:44
        +6

        It's a standard practice, most likely you didn't pay attention because the broker didn't mention it. I always mention the clawback to my old clients to make sure they understand I don't work for free. But to be honest, I had over 10+ clawback over the years but never bothered chasing the clients up for it, i just treated it as expenses and not worth my time for chasing them up.

        • trapper on 13/03/2023 - 10:09

          But to be honest, I had over 10+ clawback over the years but never bothered chasing the clients up for it, i just treated it as expenses and not worth my time for chasing them up.

          It would be very difficult to get anyone to pay you $3k like this.

    • funkybits on 11/03/2023 - 23:13
      -1

      Thank you very much as looks to be one of the few intelligent and informed responses.If it is normal practice etc that makes me more understanding of the circumstances i find myself in and a learning for the future. Cheers again :)

      • drfuzzy on 12/03/2023 - 17:07

        It is normal practice.
        You could have just asked that upfront and saved the trouble.

    • azero on 13/03/2023 - 09:01
      +1

      I can guarantee that it is not standard practice and she is a sh!t broker. Just refinance with a different broker. I'd just ignore the original broker. Don't bother with the 3k.

      A good broker will help to refinance (like mine) and the new commision will cover the clawback. And the broker will have a good relationship that will generate more over time than that 3k. Once again, that was a sh!t broker - move on.

  • AngoraFish on 11/03/2023 - 14:52
    +3

    The paper you signed enabled her to claw back her 3 year commission on your mortgage if you CANCEL it. Since you didn't pay her a fee up front this is how she makes her money.

    Mortgage brokers typically won't charge you this kind of fee if you use them to refinance as they can stay on the commission gravy-train; in fact, they're normally ahead if you do refinance.

  • burningrage on 11/03/2023 - 15:05

    I think the fact of the matter is that you made a bad decision to overdisclose and now you are paying the price.

    Even if that was the case, they couldn't "made" you sign an agreement unless there is gun pointed on your head with paper to sign your life away on the table.

    I am paying the price too for being too nice to my refinancing bank so I simply didn't sign with approved loan document and planned to go to another broker to start all over again because it was truly a bad experience.

  • Drakesy on 11/03/2023 - 15:14
    +2

    Sounds like you had an opportunity to not sign.
    No one forced you
    Theres hundreds of brokers out there…

  • tsunamisurfer on 11/03/2023 - 15:42
    +19

    Can we change the title to I couldn't be F'd looking elsewhere, so I signed whatever the Broker put in front of me?

    • drfuzzy on 12/03/2023 - 17:09
      +1

      Should be a generic thread - could be purchasing a vehicle, a mobile phone contract, or even a new home.
      Close your eyes, sign now, think later.

  • GordonD on 11/03/2023 - 16:45

    Yes, I think its unethical that the OP put his broker through all the work of arranging a loan for him, knowing all the time that he intended switching banks before the broker got her payment from the bank for doing that work. The broker isn't there to provide a free service. She isn't a charity. She's running a business. How would the OP like it if someone did it to him? Got him to do a whole lot of work, even while knowing that he wouldn't get paid for it.

    • AngoraFish on 11/03/2023 - 17:41
      +6

      The broker is running a business that advertises itself as a free service. It's not OP's business how a broker claws back fees from third parties at the back end.

      Furthermore, the broker has already made an up-front commission, it's not like they're actually working for free. All they're losing is a bit of trailing commission at the back end, balanced by all of those other trailing commissions they're still getting for a bit of paperwork they did a decade earlier. Cry me a river.

      In any case, had the mortgage broker actually done the job they typically claim to be doing and recommended a mortgage product that didn't end up lagging well behind the competitive end of the market after only a year or two then this would never even have come up in the first place and they could happily continue collecting on that gravy train for life.

      • tomleonhart on 11/03/2023 - 17:48

        "Furthermore, the broker has already made an up-front commission, it's not like they're actually working for free. All they're losing is a bit of trailing commission at the back end, balanced by all of those other trailing commissions they're still getting for a bit of paperwork they did a decade earlier. Cry me a river."

        Most bank claws back 100% or 50% of the upfront commission based on the time frame. Banks do not claw back the trailing commission so your statement is the wrong way around.

        • AngoraFish on 11/03/2023 - 18:57
          +2

          The trailing commission stops once the mortgage stops, that's how they work. My reference to clawbacks was just to describe the broker's expectation that if the bank wasn't going to give them a cash bonus, OP should be required to cover the value of foregone profits instead.

          If the bank is clawing back up front commission from the broker the broker is working for the bank, not the client. If OP is getting reamed on his new mortgage because his broker stuffed up, or worse had an obvious conflict of interest, it's unethical for the broker to expect to be compensated for their incompetence.

          • tomleonhart on 11/03/2023 - 19:32

            @AngoraFish: I don't know why you have a problem with the broker business but that's fine by me.

            All I'm saying is your statement of "broker has already made an up-front commission, it's not like they're actually working for free" is wrong. Because broker are certainly working for free if the client refinance within 12 - 36 months.

            If the bank is clawing back up front commission from the broker the broker is working for the bank, not the client.

            Most bank employee gets a salary regardless of how much loan they write. The more loan they write, the more bonus they get but they already have a salary as a base.
            For a broker, they write no loan, they get nothing. And if the client refinances within the clawback timeframe, broker also don't get the up-front commission, how is that working for the bank ?

            • AngoraFish on 11/03/2023 - 21:59
              +2

              @tomleonhart: I have no inside info, but this says 100% in 0-12 months and 50% in 12-24 months, with some charging nothing https://blog.hashching.com.au/one-thing-need-know-clawback-f… $3k out to 36 months seems a stretch.

              Notwithstanding the above, if I stuff up and underquote on a fixed-price job that ends up going tits up I have a legal obligation to rectify at my own expense, even if I lose money on the job. I don't get to come back to the client for a second helping. People do occasionally stuff up, but if I'm any good at my job i make it up on average.

              And while we're at it, here's the usual line, in this case from Mortgage Choice:

              How much do brokers actually get paid?

              On average, a mortgage broker's commission is 0.15% of the loan balance. This equates to approximately $600 a year on a $400,000 loan balance.

              Why is trail important?

              Trail incentivises your mortgage broker to ensure that you are in a suitable home loan for your needs over the long-term and it means that your broker can continue to provide you with home loan service at no cost to you, throughout the life of your loan.

              (I'd include the link to this as well but don't need the hassle of getting flagged for spam)

              Guess that worked out well in this case, eh?

              To answer your second question, it's working for the bank because you get paid by the bank. Ultimately, the person or company who pays the bills gets to call the shots.

              When I win a job the person who pays my invoice is my boss. Doesn't matter if they sent me around to to do some odd jobs at their mum's place, so long as they like the outcome their mum's opinion about my work ultimately matters sod all to me. You don't have to be on an hourly rate or draw a salary to work for someone.

              • tomleonhart on 12/03/2023 - 01:08
                +1

                @AngoraFish:

                Notwithstanding the above, if I stuff up and underquote on a fixed-price job that ends up going tits up I have a legal obligation to rectify at my own expense, even if I lose money on the job. I don't get to come back to the client for a second helping. People do occasionally stuff up, but if I'm any good at my job i make it up on average.

                You’re correct. The broker quoted OP a price for a fixed job for a period of time. OP signed it and then now complaining about having to pay for such job. OP has the obligation to fulfil the contract that he/she has signed.

                To answer your second question, it's working for the bank because you get paid by the bank. Ultimately, the person or company who pays the bills gets to call the shots.

                You’re also correct. It’s OP who is paying for the invoice. The only difference is that the invoice from the broker is only valid to OP if he/she refinanced within the given Time frame. Otherwise that invoice is void. So OP is the boss, he/she signed the invoice which is chargeable to the bank if they don’t refinance within the time frame in the contract. So OP is the boss.

      • us3rnam3tak3n on 12/03/2023 - 09:47

        I thought trailing commissions were banned but when I searched I found this article:

        https://www.abc.net.au/news/2019-03-12/government-backs-away…

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