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
The broker put time and effort into the service they provided to arrange the loan. They should be fairly paid for this work, in the same way any other serivce provider would expect to be paid for their time and expertise, and I assume they disclosed the cost at the time. If they didn't that's another issue entirely but it sounds from OP's comment like they did. This payment is usually in the form of commission, but that can be clawed back if the customer then exits the loan within a certain timeframe. It seems the clause signed was to protect the broker from this situation.
So essentially the broker may end up getting paid nothing or a reduced amount if the customer exits the loan early. They still did the same work and provided the customer with the same service, but suddenly now its ok for them not to be paid (or lose the amount they were paid) because the lender has apparently moved the goalposts in the form of offering an unattractive interest rate compared to others. This isn't the broker's fault assuming it was not foreseeable.
I question the ethics of trying to avoid an agreement such as this that was signed in good faith, but if you are happy to disregard this and go down the route of AFCA for example the broker may well cave because being at AFCA will cost them more in case fees even if the decision is in their favour. The fair outcome in my view would be for the broker to be paid as agreed.
The current competition in the lending space sees many cashback offers being made by lenders to entice people to refinance. Obviously rising interest rates also increases focus on this by customers. Put yourself in a broker's shoes for a minute where they may lose income they generated a couple of years prior thorugh no fault of their own due to increased refinancing activity encouraged by lender incentives such as cashbacks. The moral high ground doesn't rest with the customer in this case in my view.