Australian originator sheds light on commissions

Michael Russel, CEO of Mortgage Choice, Australia’s biggest independently-owned originator, recently took it upon himself to correct some misconceptions about the commissions that originators receive from banks in return for the home loan business they generate.

Commissions

He was responding to media articles, which claimed that originators were failing to adequately disclose these commissions to customers, and that borrowers were being charged additional interest on their home loans to compensate the banks for the commissions they had to pay to originators.

“It is important to set the record straight, and to reassure home buyers that licensed mortgage brokers (originators) are actually working in their best interests,” he said.

Firstly, he noted, there was legislation in place, in the form of the National Consumer Credit Protection Act, to protect consumers from non-disclosure of any fees or commissions paid with regard to their home loans.

Secondly, he said, there was categorically no premium added by lenders to their published mortgage interest rates to compensate for paying mortgage broker commissions. “It is widely publicised that lenders pay mortgage brokers a commission for arranging a loan… and customers are not penalised in any way for using a mortgage broker as opposed to going direct to that same lender.”

And the situation is almost exactly the same in South Africa, notes BetterBond Home Loans CEO Shaun Rademeyer. “Here consumers have the National Credit Act and the Consumer Protection Act to provide safeguards against non-disclosure, and only accredited originators can apply for bonds on behalf of consumers.

“What is more, there is absolutely no additional charge to the consumer who secures a home loan through an originator rather than going directly to a bank. In fact, thanks to the efficiency of our loan application procedures, borrowers who are customers of originators will often end up paying a lower rate of interest on their bond, thereby saving many thousands of rands in interest over the life of the loan.”

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About BetterLife Home Loans

Since 2003 BetterLife Home Loans has been SA’s No.1 Bond Originator, handling the entire home loan application process on your behalf – free of charge! Our aim is still to source the best interest rate for you by submitting your home loan application to all the major banks. There is no easier way to apply for a Bond or Home Loan in South Africa!

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