Q: In light of the Banking Royal Commissions recommendation to have the upfront commissions currently paid to mortgage brokers by lenders changed to a fee for service model over the next couple of years, can we ask:
Do people believe consumer’s would be prepared to pay an upfront free to a mortgage broker to help them obtain a suitable home loan?
What impact would such a change have on consumers?
What impact would such a change have on the home loan industry?
A: Hi Paul,
Thank you for opening up this discussion on this forum.
A number of clients have spoken to me this morning about this and the general consensus is that although they value the service brokers provide, they don't want to pay an upfront fee to a broker when the lender they choose is currently doing that and don't see how this would benefit consumers if a fee for service model was mandatory.
Some of the impacts on consumers and the home loan industry I can foresee are:
- It will become more costly or difficult for consumers to access smaller lenders which are heavily reliant on brokers, especially in regional areas
- Less access to smaller lenders will in turn reduce competition for the larger banks which is likely to have negative consequences for consumers
- Increase in costs for consumers to obtain credit either due to upfront costs or via reduction in competition
- Less tailored information available to consumers
Home Loan Industry
- Removal of upfront commissions will very likely just increase profits for lenders while putting a question mark on the viability for many mortgage broking businesses
- Removal of trail commissions will essentially devalue every mortgage broking business and again, very likely to increase lender profits
- Smaller lenders will most likely lose market share as they are somewhat reliant on brokers
- Larger banks will most likely increase market share
The only "positive" I can see is for a fee for service model is that it would remove the perceived conflict of interest that the productivity commission has already found to have no systemic harm to consumers. In fact, they found the opposite.
I don't for a second dispute that there are bad eggs in this industry (as with any) and I 100% support any fair and practical action to weed them out but in my humble opinion, changing to a fee for service model would have a "net-negative effect" for consumers and the over all industry which I don't believe was the purpose of this Royal Commission.
I truly hope that which ever government is charged with taking action, does so with consideration to the actual real world implications and not use this blindly as a political maneuver.
For now I will continue doing what I believe in, the best I can, until such time it's no longer viable or I don't believe I'm providing value.
Q: Hi All,
I hope you're all winning!
I have a tax question for the accountants here.
If someone has held a company for over 12 months and is now selling the business, will they be up for full CGT? Or do they get a similar concession to a real estate asset?
The business has been held by 2 directors and shareholders and will each have an equal share of the proceeds from the sale.
Q: I set up my own marketing business 12 months ago and have just won 3 new contracts which will mean putting more staff on. We have one cornerstone client on a 2 year retainer at 15k a month and would like to ask if it is possible to get a 50k business loan to help fund the new staff?
A: Hi Beth,
It's great to hear you're doing well and growing your new business.
Would you like to get in touch for a chat? I'd like to find out more about yourself and your business to see what solutions might be possible for you.
Q: Hi All,
I'm a mortgage broker and I am looking for a Burmese speaking solicitor in Sydney that can assist a client of mine with independent legal advice and signing loan contract documents.
Can anyone help?
Q: Hi my friend earns $1800 p/w from Uber and He is been driving Uber one year full time. Can he get a home loan with Uber income?
A: Hi David,
What Scott and Nathan have said is spot on, your friend will be classed as self-employed and there are some lenders that have "low doc" policies available but can have LVR restrictions around this too.
I would suggest getting in touch with Scott, as a finance broker he should be able to look into your friend's situation detail and explore more specifically what solutions are possible for them.
Q: I would like to get some advice on the maximum percentage I could borrow as a first home buyer. I have $53,000 available for a deposit and my salary is $87,000... thanks?
A: Hi Mark,
As Caroline said, it is hard to be specific without knowing your situation in detail as there are a number of factors that that will determine the price point you can purchase at.
Firstly, different lenders will assess your borrowing capacity and ability to repay a loan slightly differently, just some rough numbers around that would be $500k on the low end and $600k on the high end. (based on income only)
Another factor to consider is the percentage of the property value, some lenders will allow up to 95% of the property value including lenders mortgage insurance.
There are options available to avoid lenders mortgage insurance such as family guarantees but again different lenders will apply this policy slightly differently.
There are also costs involved in purchasing a home such as legal fees, pest and building inspections etc. Keep in mind too that in NSW stamp duty exemption is available for first home buyers for properties up to $650,000 and concessions apply between $650,000 and $800,000.
Keep in mind that this information is general in nature and your full situation would need to be understood before providing specific advice.
I would suggest getting in touch with a mortgage broker in your area to help guide you through the process. A good broker will take the time to understand your situation in detail and find you some solutions that are right for you.
I hope that helps and I am happy to have a chat on the phone if you need.
True Wealth Finance
1300 18 40 15
Q: I am thinking of leaving a full time role to set up my own business but concerned about the initial cashflow. Everyone is telling me to go for it so I’d like to ask about finance and can I extend my home loan before starting the business. The unit is probably worth 500k and the home loan is $210k. Is this a good way to get started as I already have a number of clients in the waiting?
A: Hi Jacqui,
I take it when you say "extend" your home loan, you mean to "cash out/draw" on your equity?
Although some lenders may allow this as an acceptable reason, an issue through the application process might be around being able to answer the responsible lending question "Are you aware of any changes in the future that may affect your ability to repay this loan without financial hardship?"
Please note that this information is general in nature and I would recommend you contact a mortgage broker in your area to go through your situation in more detail to find out what's possible for you.
Also this is just a suggestion, perhaps it might be a good idea to get in touch with a business coach or consultant to get an idea of how much start up capital you will need, how long it will last and plan your way to break even etc.
Q: I have a property…market value $1.3M and loan is $420k. I was hoping to increase the loan to $700k and use the additional funds for a range of investment opportunities but the bank will only approve $100k. Income is not the issue, apparently cashout restrictions!!! What does this mean and will I come across the same problem if I go to refinance?
A: HI Andrew,
Different lenders have different policies around "cash out". There are a number of lenders that are more flexible with both the amount and purpose for the cash out.
This is general advice, I would recommend getting in touch with a mortgage broker in your area. A good mortgage broker should take the time to understand your situation in detail before comparing a number of lenders to find the best solution for you.
Q: I got my first home loan when Aussie Home Loans first started and undercut the banks. One of my kids is about to buy their first home and I was wondering if there was a new non-bank doing what Aussie did many years ago?
A: Hi Adrian,
Firstly Congratulations, I'd imagine your home loan is either paid off or very close to.
When Aussie Home Loans launched, they were Australia's first non-bank lender and really shook up the market place by undercutting most of the competition substantially. Since then, in 2002 they re-positioned themselves as a mortgage broker.
These days, there is certainly no shortage of Mortgage Brokers to choose from. The home loan market place can also be overwhelming to compare yourself with so many different options and "buzz words" floating around. A good mortgage broker should take the time to understand your kid's situation before comparing all the options available and it should not cost them any more than if you went directly to a lender yourself.
You have been offered plenty of help here but if you would like to have a chat, I would love to hear where your kid is up to, their goals and what they're trying to do. I have access to over 40 bank and non-bank lenders to compare and find a solution and strategy that is right for your family.
Q: Hi we are in a predicament. We live on a big block of land in our current home. We are in final stages with council for an approved DA to subdivide the land and build a new home on it. We will sell the one we are in and live in the new one. Problem is we have no money to finish the existing home, sell it and then build the new one. Once existing home sold we will be laughing however the bank won't lend us money to finish. We are stuck, any advice appreciated?
A: Hi Angela,
Different lenders have different policies so if your bank has said no, it does not mean that all the others will too.
I would suggest getting in touch with a broker as there are a number of ways to approach this but we would need to look at your situation and what's important to you in detail before trying to match a solution and possible outcomes to your predicament.
If you would like to get in touch to explore what's possible, I'm happy to have a chat.
True Wealth Fiannce
1300 18 40 15
Q: Q: I own my old home outright (The house in my name ) we want to knock it down and rebuild a single storey, We are also have our names in a property in which to help our only daughter to buy, Currently we are living in our daughter new home because our old home is unsafe to live in.
My daughter and us have borrowed 1.2mil in order to buy her dream home, my wife and myself total income approx$95k
When my daughter get married how do we obtain a construction h/loan to build the old house ?Rob
A: HI Rob,
There are a number of things to consider here such as, when your daughter gets married, do you and your wife intend to stay on the title and loan with your daughter or will she and her husband look at refinancing under their names only ? and will they be able to? This may also have some tax or transfer implications.
Also different lenders will have different policies around how they will assess your current liabilities i.e. some lenders may accept your portion of ownership and debt whereas others will include the total $1.2 million loan as your liability in their assessment.
This information is general in nature and I would need to review your circumstances in more detail to advise what options and borrowing strategies might be possible for you.
If you would like to explore your options further, please don't hesitate to reach out to us.
Q: My husband and I have full time jobs. His income is 95,000 and mine is 72,000 and our home loan is ANZ, $490,000. We just checked our internet banking and the rate on the loan is 4.62% and we would like to ask if that is too high and what should it be. We do have a credit card limit of $5,000 but we very rarely use it?
A: Hi Pam,
There are currently a lot of options well below 4% at the moment, I have seen as low as 3.63% p.a. Again as Nathan has stated this information is general in nature and a review of your personal situation is needed to understand what options are available for you.
If you would like to explore what's possible for you, please don't hesitate to get in touch.