A common question I get asked is, 'How much do I owe you?' This is one of my favorite questions to answer because the answer is 'nothing.'
I'll go over why there is no fee for my service here.
Mortgage brokers have been active in Australia since the early 1980s and now write over 67% of all home loans in Australia. Mortgage Brokers are a vital cog in the process of everyday Aussies understanding their financial situation and helping them get the best deal they possibly can on their home loan. We provide a way to keep competition between banks high while also offering a wide range of options for our customers.
While some mortgage brokers do charge a fee for service, this is not a common model in Australia, and it is not a model that I believe is in the best interest of the general public.
The way the majority of mortgage brokers get paid, and how I get paid, is from the banks. When we go through our process and get to a point where the customer settles a home loan, whether that be through a purchase or a refinance, the bank that we have introduced the customer to will pay us a fee or a commission for doing so.
Upfront Commission
This commission varies from lender to lender but is typically within 0.65-0.70% of the total loan amount.
So on a $500,000 home loan, this commission works out to be approximately $3,250. This commission is paid based on the mortgage broker doing all of the work on behalf of the bank, from holding all of the meetings and gaining an understanding of the customer's requirements, providing recommendations all the way through to collecting all of the documents and packaging the home loan application to a high quality. The bank, therefore, does not need to employ staff members to perform this work and has money set aside in their budget to pay brokers for this work.
Trail Commission
On top of this, a bank will pay a mortgage broker a trail commission of approximately 0.15% of the total loan amount per annum.
On loan of $500,000, it works out to be a maximum of approximately $750 per year. This commission is paid on the basis that a mortgage broker is responsible for keeping the customer happy within their home loan, handling any maintenance inquiries.
While the commission may appear substantial, this process can stretch over weeks, months, and in some instances, even years before it transforms into a settled home loan. We encounter clients seeking assistance in purchasing their first home, obtaining pre-approval, but eventually facing challenges in finding a property that suits their preferences. This results in a prolonged process of providing support until they locate a suitable property which in some cases has taken years.
Does Fundi Finance charge a fee for its service?
Here at fundi finance we do not charge a fee for our service.
We get paid by the Banks.
Why Don't you charge a fee?
We don't charge a fee because we don't believe that a customer of ours should be lobbed with any additional charges than they are already getting with their home loan. If we can find them a way to save money, We will do everything we can to make that happen. It also feels good to be getting paid by a bank while providing a service that we believe adds value to people's lives."
Comments