Going For Broke On Loan Commissions
The Age
Saturday May 8, 2004
A new mortgage broker has already raised the wrath of rivals by offering to hand back to customers up to half the commission paid by lenders.
The director of Refund Home Loans, Wayne Ormond, said customers borrowing $300,000 could expect to get back about $1000 of the upfront commission paid to the broker.
``None of our franchisees have shopfronts, so therefore they don't have the cost and we are passing that saving on to the borrower," he said.
``Shopfronts are good for branding and good for the franchisees but not necessarily good for the borrower, who is effectively paying for the shopfront lease."
However, rival brokers such as Tony Harris of Money Store argue that brokers need the commission to build up their businesses, which ultimately benefits the consumer.
Mr Ormond said a typical shopfront lease could cost around $100,000, but most customers preferred mobile lenders who come to them.
He said the refund would help bring transparency to the industry following last month's scathing survey by the Australian Consumers Association.
It found many brokers did not have the best loans on their books, failed to properly disclose commissions, made expensive mistakes and did not always explain refinancing costs - potentially costing borrowers tens of thousands of dollars.
© 2004 The Age
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