Mortgage broking in the media
As you may be aware the government has launched a Royal Commission into the banking industry. This Royal Commission also includes the role and remuneration of mortgage brokers, and to investigate complaints made by the public against specific mortgage brokers and potential fraudulent dealings.
At Dominion Finance, we welcome the Royal Commission and any tightening of regulation it may bring. The mortgage broking industry is still relatively new and the rules and regulations are often reviewed and strengthened to ensure that the public can be confident that the advice is professional and trustworthy.
The Team of Dominion Finance
Dominion Finance commenced in 2002 with Suzanne O’Connor and Melita Beilicz working from a small home office, and over the years we have grown and now alongside Suzanne and Melita, there are also two additional mortgage brokers Amber Ferry and Alicia Wilkinson. We also have three fantastic support staff, Molly McDonald Crowley, Leonie Walz and Jamie Evans.
Together we are an award-winning team, that is dedicated to our goal of “helping you achieve”. Whether that be purchasing your first, second, third, fourth home, an investment property, or that new car that you have been wishing for, we are here to help.
Remuneration
As stated, the Royal Commission is also looking into mortgage broker remuneration, how we get paid by the banks for the service we provide to you.
As all our existing customers would know, by law we are obliged to reveal the upfront and trail commission each bank will pay Dominion Finance for each loan option that we offer to you. In this way you can see that we are not simply offering loans that pay us the most money.
I believe we all understand that any business that does not work in a fair and ethical manner in a small community such as Canberra, will not be in operation for very long. Certainly not for the sixteen years that Dominion Finance has been in operation.
Our best source of advertising and new enquiries generation comes from word of mouth from existing clients. This must mean we are doing something right and we are very grateful to you.
A recent survey has shown that over 55% of people are now using a broker when obtaining a loan. The banks recognise this to be a valuable service and pay us accordingly to introduce and retain business for them.
The banks save money by using brokers as they do not have to have additional branches with the burden of staff salaries, superannuation, building leases etc. They outsource the lending work and financial burden of operating a business to the mortgage brokers, which is why the interest rates for loans introduced to the bank are the same or often lower as they would be if clients went directly to a bank.
The banks pay brokers an upfront commission following the settlement of the loan and then an ongoing trail commission. The amount of both commissions and the duration of the trail depend on the bank’s commission payment schedule.
If the client pays out the loan within the first two years whether this be by moving the loan to another bank, or simply paying the loan out, the bank will “clawback” the commission from the broker. This in effect means the broker did the work of organising the loan for free.
Also, when we organise a loan for a client and they do not proceed with a purchase, there is no remuneration for our work, again we have gone to that effort for free.
Although it may seem like an upfront and trail is very generous, there are many instances where we do work for free or we have the commission for the work we have done taken back from us and we still must cover those expenses such as staff salaries, superannuation, building leases etc.
Ongoing Relationship
As our clients we hope that you are all aware of the ongoing service we provide, not only obtaining your best suitable loan, but also dealing with real estate agents, solicitors, and valuers to have the purchasing process go as smooth as possible.
We are always here to answer your questions and providing support on your existing loans. We regularly review your loan to make sure it is still ideal for you and we will contact you if we believe you need to modify it due to a change in the market.
At Dominion Finance we are here to help you achieve your financial goals.