[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

August 28, 2009 - 5:27 am

please note i was doing the prior post inbetween phone calls so didnt see Michaels response ta

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

August 28, 2009 - 5:25 am

If I am correct… the assumption is that the loan runs for a full 30 years and the balance is $450k.

I.e. 450k * .60 = 2700 upfront and, 450k * .2=900 trail. 900 p.a. trail * 29 years = 26100 (assumes no trail paid year 1).
So 2700+26100 = 28000

But the reality is that loans dont run for 30 years without reducing (I couldnt tell you the last loan I did see which ran for 30 years to begin with) so this figure is flawed and likely less.

Now if they did, assume that 70% was rebated back, this equals 18270, and the broker would then earn trail at 30% or 7830+2700 = 10530. Or over 30 years 351 a year.

or its the math that the comm paid to the broker is a %age of the loan. ie.. 28k/450k, however that works out to be @15%. Less the 70% yadayadayada.

As far as the clawback – from my understanding, the commissions get paid to the broker, then the broker transfers it out to the client, and its not the clients business liability – its the brokers. Now if I’m a client, repay my loan in 18 months and my broker said to me – hey remember that loan you just paid out, well I got clawed back and its come from my income on other loans. Can you please give me 2700 for my upfronts and 70% of the trail for 6 months and that’ll fix me up.

Dont know what the likelyhood of this is for the MB to be successful in getting it back in these instances.

But if all you’re earning out of it is 350 a year per client less than a dollar a day before expenses – I think that will impact.

I might have to go buy this magazine to get me some enlightenment.

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

August 18, 2009 - 2:10 am

To add in to this…
Its not necessarily correct that brokers earn the same amount from one lender.

For example, NAB have different broker 'star' ratings which range from 1-5 stars.  The higher the star rating, the more commission the broker earns, as well as has more product access, higher lends etc (leaving their service quality out).

With Westpac as another example, you have brokers who are Aplus versus 'normal'.  While the overall base commission is the same, the Aplus's can get the loan assessed more quickly than a normal broker can.  Sometimes this can be a day or two, or when the banks get backlogged this equates to weeks.  So the ability to have the loan approved versus not approved…

Point being that commissions brokers earn from the same lender can vary on these points, as well as the arrangement that brokers have with varying aggregators who negotiate things, collect fees etc.

In my case, when I first started broking I was on a 80/20 split, where I kept 80% and the aggregator kept 20%.  Shortly after I switched aggregators and went to Fast, who charged about 150 a deal, which meant I increased my turnover by @19% the day I switched aggregators.  So initially one could think that you could give 15% back as a rebate and still be better off than on the 80/20 split.  But with the commission cuts by the lenders the reality of this is that financially (for me) not a viable proposal. 

The other thing which I'll admit I'm not clear on is the issue of clawbacks, where say a rebater receives the money back and then refinances the loan to another institution within say a two year timeframe (say for whatever reason – assume the brokers the greatest in the world but the couple split up and sell the house).   Normally the bank then claws back all the commission paid to the broker.  Since the broker didnt receive the money or they passed it on, they could be running at quite the loss.  On that note though, lenders like NAB and CBA dont pay trail in year 1 anyway, so in these cases it could be a bit of a moot argument as 100% of nothing is nothing.

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

August 18, 2009 - 2:09 am

To add in to this…
Its not necessarily correct that brokers earn the same amount from one lender.

For example, NAB have different broker 'star' ratings which range from 1-5 stars.  The higher the star rating, the more commission the broker earns, as well as has more product access, higher lends etc (leaving their service quality out).

With Westpac as another example, you have brokers who are Aplus versus 'normal'.  While the overall base commission is the same, the Aplus's can get the loan assessed more quickly than a normal broker can.  Sometimes this can be a day or two, or when the banks get backlogged this equates to weeks.  So the ability to have the loan approved versus not approved…

Point being that commissions brokers earn from the same lender can vary on these points, as well as the arrangement that brokers have with varying aggregators who negotiate things, collect fees etc.

In my case, when I first started broking I was on a 80/20 split, where I kept 80% and the aggregator kept 20%.  Shortly after I switched aggregators and went to Fast, who charged about 150 a deal, which meant I increased my turnover by @19% the day I switched aggregators.  So initially one could think that you could give 15% back as a rebate and still be better off than on the 80/20 split.  But with the commission cuts by the lenders the reality of this is that financially (for me) not a viable proposal. 

The other thing which I'll admit I'm not clear on is the issue of clawbacks, where say a rebater receives the money back and then refinances the loan to another institution within say a two year timeframe (say for whatever reason – assume the brokers the greatest in the world but the couple split up and sell the house).   Normally the bank then claws back all the commission paid to the broker.  Since the broker didnt receive the money or they passed it on, they could be running at quite the loss.  On that note though, lenders like NAB and CBA dont pay trail in year 1 anyway, so in these cases it could be a bit of a moot argument as 100% of nothing is nothing.

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

November 14, 2008 - 11:08 am

inflation going up… any opinions on gold in line with that?

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

November 4, 2008 - 10:10 am

IMO you're going to be absolutely hammered with interest costs not to mention rams' exit penalties
fixed rates will be 2% lower than what you're on

I think you're stuck

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

November 3, 2008 - 10:43 am

Hope I'm not misinterpreting this but

1) thanks hleung

2) CBA – agree with RT that  you use them when you have to but in most cases I've found they have picked up their game a lot.  In comparison to ANZ taking 10 days to approve a loan currently if I had my choices and short timeframes then you wouldnt discount them.

3) I'm not posting on this forum or on SS from here on in to pick up clients – I'd rather be able to throw in my 2c if that suits (you'll note by the number of posts I do here that it isnt heaps anyway in comparison and my time on pi.com is very rare).  I would also back Richard Taylor as being a hell of a good broker for any to use regardless of where you are.

4) In the case at hand, IMO, Westpac would come before ING in this case not just due to them waiving LMI but due to they have an offset and again IMO a better suite of products than INGs, and I'm getting unconditionals out of westpac in <4 days.

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

October 7, 2008 - 2:23 am

Wasnt this previously discussed here?

https://www.propertyinvesting.com/forums/community/opinionated/4324800

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

September 4, 2008 - 1:23 pm

Spicy

how did you go?

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

August 15, 2008 - 5:05 am

bluedog

Just a thought but perhaps you could pm kylie your details and she could get the info that you have been chasing.  Could be a blessing that she is on the same forum as it gives you a direct person to contact in there

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

August 13, 2008 - 11:19 am

They're flying you up
you go to their seminar
then you see another guy while youre here
Have coffee
then they fly you back.

?

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

August 12, 2008 - 11:56 am

Spicy – I agree. 
aquarius – I dont think richard was bagging anyone as well (or by inference you)
kylie – think it is great that you’re openly welcoming to all.
Bluedog & Aqua – question for you I suppose is would you do another with them, knowing what you know now.  Seems there are a few back office issues

Where are the properties located as well – i.e. brisbane cbd?

[lukentelMember@lukentelJoin Date: 2007Post Count: 14]

August 7, 2008 - 5:26 am

Spicy

Do yourself a favour and call Richard Taylor and get a second opinion