A lot is being said about brokers at the Royal Commission currently being held into the Finance Sector regarding the conduct of banks and brokers.
A major bank inferred at the Commission last week that broker clients are likely to pay more for their loan through a broker rather than direct with a bank.
A story I would like to share with you, with that in mind.
I wrote a loan for a client 15 years ago (with a major bank) to purchase a property. I assisted her with a second loan (with the same major bank) about 2 years later to recoup equity to purchase an investment property jointly with her friend.
The second property was later sold with a small debt left over from the second loan.
While at the bank doing some banking (5 years ago), the client was asked by the banker if it was ok if they reviewed her loans and maybe amalgamate them to make it simpler (even though it was a broker introduced loan).
Client agreed to the amalgamating of the two loans.
Client contacted me a year ago when looking to purchase an investment property.
Appears when the bank did the review 5 years ago, they rewrote the amalgamated two loans over a 30 year term (increasing the remaining term by 10 years) plus did not apply the package and associated discounted interest rate which she previously held.
I have since arranged the package and interest rate discount for her which saves her $4,000 per year.
That doesn’t take into account the $215,000 (approximately) it is going to cost her in additional repayments extending the loan term another 10 years.
If you would like a review of your current home loan, engage the services of a broker.
It is my belief that brokers try to keep the banks honest.