When I started my financial advice business Brand Financial several years ago, I wanted to offer my clients a flat-fee mortgage service, where commission was capped or refunded in full, in return for a set fee.
My motivation was to provide a mortgage broking service consistent with the philosophy of Brand Financial, where we are only paid by our clients and where we remove or refund any commission from any financial product, whether it be insurance, super, investment or a mortgage.
For years, I offered mortgage advice for a flat fee with a full refund of all upfront and ongoing trailing commission. But that flat fee meant many people with small loans and simple needs were scared off. The complexity of charging a separate fee also meant clients had to sign a complicated agreement.
I started Brand Mortgages so I could offer a mortgage broking service where, rather than charge a seperate fee upfront, we simply cap the commission we receive from the lender at a set amount, and refund 100% of the remaining commission from then onwards. This way, we are paid a set amount, regardless of the lender we choose or the loan size we recommend, and we only get paid if you get a loan. You also avoid having to read through a complicated agreement.
I’m not a fan of commission. It creates a potential conflict between your broker’s interests and your own (they are potentially paid differently by different loans and certainly paid more the more your borrow). Having said that, there are many excellent mortgage brokers out there who choose to be paid by commission and who do a great job.
I recommend you choose a broker based on the quality of advice they give and not whether or not you get a refund of any commission.
The advice you get is where most of the value is based. I just choose to cap my commission, so my interests are more closely aligned with my clients.
Justin Brand, Director Brand Mortgages