Borrowers usually engage a mortgage broker as they can recommend mortgages from up to 30 lenders, but many brokers only suggest loans from one or two of their favourite banks, according to Sydney broker Tony Harris.
Speaking at a recent Property Observer webinar, Harris highlighted the importance of selecting the best mortgage broker. He noted that borrowers usually ask brokers about how many lenders they can recommend, but the answer given may be misleading.
“A lot of brokers have 25 to 30 lenders on their panel, but in reality they are probably only writing loans through two or three lenders.”
“The reality is that some brokers are wedded to certain lenders over others because they are comfortable with them and they understand their loan criteria,” he said, divulging the little-known industry secret.
“So the first question is how many lenders can you recommend, but then the next question is how many loans have you written so far and how long have you been in the industry.”
Moreover, borrowers should ask brokers about the different banks on their panel.
He also revealed that brokers are paid by lenders through direct commission of around 0.5 to 0.7 percent of the loan balance and an annual “trail” commission that ranges from 0.15 to 0.2 percent of the mortgage balance.
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