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| Q. | I thought that borrowers don’t pay any extra when they go through a broker (i.e. they would pay the same rate if they went to the bank direct)? |
| A. | Just because brokers don’t collect commissions directly from you doesn’t mean you are not charged. Lenders charge you an amount that includes broker commission (of about 0.6% at settlement and 0.2% per annum paid each month for the life of the loan - about $15,500 on a $350,000 loan over 30 years). |
| Q. | Don’t mortgage brokers offer a free service? |
| A. | Mortgage brokers are not free. On a $350,000 loan, a mortgage broker can easily earn an upfront commission of $2,000 plus - then collect over $13,500 more during the life of a 30 year loan. If the borrower stops repaying the loan, the mortgage broker stops getting commission; so who is really paying for it? Vanilla Loans fights to get that money, your money, back into your pocket. |
| Q. | My mortgage broker is impartial because he is paid the same no matter which lender I choose. Isn’t that true? |
| A. | Maybe? Lenders pay different rates of commission, so if your mortgage broker is paid the same, it’s probably the business owner that benefits from your choice. This creates a conflict of interest if they are also the ones programming the loan comparison software and managing or providing the education to the broker that is helping you with your mortgage choice. |
| Q. | Is Vanilla Loans the same as Refund Home Loans? |
| A. | No - Refund Home Loans is not a borrower’s agent, but an ordinary mortgage broker that refunds a small portion of its upfront commission to borrowers. Their business model relies heavily on earning trailing commission from lenders and they are limited to a panel of lenders. |
| Q. | Why haven't there been borrower's agents in the past? |
| A. | A. There has been - that's how mortgage broking started. But somewhere along the track, the banks starting paying commission to brokers and took control. Nowadays, they've almost bought out the game. For example, National Australia Bank owns Challenger, which owns Plan Australia, FAST and Choice Aggregation Services - which between them control about 30% of all mortgage brokers in Australia. And then there's Aussie, perhaps the biggest mortgage broker in the country, with Commonwealth Bank as a major shareholder - and on it goes. |
| Lick here for a sweet vanilla deal. | |
