Are there any hidden costs? Any times where I might have to pay a fee?
In most situations, using a mortgage broker is free for you.
Especially if you're buying a home or investment property with a standard home loan from a main bank.
However, there are some exceptions where a fee might be charged:
#1 – Clawbacks
Sometimes life changes. So you might take out a loan … and then a year later decide to switch banks.
In that case, the bank might "clawback" the commission they paid the broker. That’s because you usually need to stay with a bank for 2 years for the mortgage adviser to keep their commission.
But if you switch too soon, the banks might take some of that commission away.
In this case, the broker may (but not always) pass that fee on to you. Especially if you decided to use another mortgage adviser to switch lenders.
That said, most good brokers will explain this risk upfront so there are no surprises later on. And although most brokers can charge you the fee, not everyone does.
We often don’t charge clawbacks at Opes Mortgages (even when we can). That’s because it’s often not the right thing to do.
#2 – Lending for property development
Property development loans are more complicated. They require extra work. And the lenders typically don’t pay commission to mortgage advisers.
So, some mortgage advisors will charge for the time and expertise needed to get those loans over the line.
For example, it could cost $10k+ for a broker to arrange development finance.
At Opes Morgages, we don’t offer development finance. We focus on working with residential property investors.
#3 – Non-bank lenders
Non-bank lenders do typically have additional charges.
For instance, they will often charge:
- An establishment fee of around $1000. These are sometimes waived
- Monthly fees
- Default loan fees, if you don’t pay the mortgage on time.
#4 – If you work with an adviser who charges.
A few mortgage brokers charge a fee for their service.
This typically ranges from $1,000 – $5,000. They’ll tell you about these fees up front.
These brokers may argue their advice is worth paying for … and in some cases that might be true.
But for most borrowers, you can get an equivalent level of service without having to pay out of pocket.
