To understand the difference between Mortgage Choice brokers and other brokers, it’s good to take a look at the structure of how brokers are paid in general.
How does it all work?
When a mortgage broker settles a loan for a customer, they receive a commission from the lender. What’s important to remember is that not all commission rates are the same across the different lenders and payments can vary depending on the size of the transaction.
To begin with, the mortgage broker receives an upfront commission which is the payment received for introducing the home loan customer to the lender. This is normally around 0.3-0.5% of the loan value.
For example, for a $850,000 mortgage where the broker would receive a 0.3% commission, this would amount to approximately $2,550 in the broker’s pocket for the upfront payment.
After the initial upfront commission, the broker then receives an ongoing payment called trail commission. This is a recurring commission that is calculated based on the remaining loan amount each year, which is paid to them on a monthly basis. Trail commission is remaining payment of the upfront commission which is received as a deferred payment.
With different lenders and banks having varying commission structures, some brokers could be swayed to recommend a product based on the rate of commission – potentially placing the broker's best interests ahead of the customers’.
How are we different?
Mortgage Choice broker commissions are different to others. All Mortgage Choice brokers are paid the same rate of commission regardless of which home loan is chosen from our wide choice of lenders. This ensures that the customers’ best interests are always at heart from day one.
Currently, this isn’t the industry standard, however, we may be moving into a world where such varying commission rates for other businesses are regulated and based on a ‘paid the same’ structure.
This would mean that if such changes are implemented, other mortgage brokers will be practising what Mortgage Choice has been delivering for years.
An important reminder
A Mortgage Choice broker has access to the same deals being offered directly by the lender and will negotiate on your behalf to get you the right deal.
Mortgage Choice brokers work hard to ensure you are receiving the home loan suited to your needs and unique situation. We are in business purely to improve the end result for our customers and we have always your best interests at heart.
Get in touch with your local Mortgage Choice broker today and feel confident knowing that we’re working hard to ensure you receive the home loan suited to you.