Resi Mortgage Corp is doing just that, turning the current argument about mortgage brokers should be remunerated on its head.
Resi director Ros Kirkland describes the product as "a whole mindshift" which has taken her company about nine months to develop. She says Resi has already conducted a successful trial of the scheme but will still be restricting its general release to two aggregating groups for the moment before making it more widely available.
While she won’t name these groups, "they need to be capable of giving us a large amount of money each month."
That translates to at least $1 million worth of loans each month.
Resi is targeting $5 million in loans under this scheme once it has been released to a wider audience.
How it works is that Resi will offer the selected brokers loans at a "gold" interest rate equivalent to wholesale rates and allow the brokers to decide what their profit margins will be, as long as the interest rate charged the customer doesn’t exceed Resi’s standard retail rate.
Resi’s current floating rate at 8.25% is just below the major banks’ rate, and its five-year fixed rate is 8.5% - similar to most banks (For a full comparison of rates click here).
The broker can charge an upfront fee of up to 1% of the loan amount.
"Most people aren’t going to charge that, but they can. They might want to take it all up front and have no trail, or they might want to take it all as trail," Kirkland says.
Each individual broker can mix and match rates and fees with clients. "Every deal will be different within the parameters we’ve set. The whole idea is for the client and broker to sit down together and negotiate a good deal."
