Beware Brokers Bearing Mortgages
In my experience, my mortgage broker was able to get a better than advertised home loan with Macquarie Bank. They also helped me obtain a mortgage while I was contracting (so classed as self employed) which can make it more challenging to be approved for a mortgage especially if you have less than two years of accounts which I was lacking.
On the other hand they did seem to default to a fixed rate deal and recently sent me an email to encourage me to fix my rate. I now realise why they prefer fixed over variable…It’s because you’re locked in for a few years, and what you have to realise is they get paid commission over the initial two years by the lender.
If, however you were to leave within that initial two year period, they have to reimburse the lender and therefore they ask that in turn you pay them to cover this clawback. Whether there is a legal obligation to pay this back on the part of the homeowner I’m not sure!
The commission we are talking about here is no small change either, in my case being 0.77% of the total loan. It’s also tiered to be more expensive in the first year, so in my case about $11,000 to switch to a non broker loan in the first year and then about $5000 if you moved away from the broker in the second year.
So use broker’s to your advantage, they should be able to get you a better deal than going direct to the bank, however just be aware of how they get paid and why they might favour locking you into a fixed rate contract.