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MFAA Prosper : Mortgage and Finance Brief 06
MaxiMise the long terM value of your business At a time when many brokers are concerned about the future of lender commission rates, nAb broker has enhanced its established commission structure, which rewards brokers for their part in maintaining a long customer relationship. The Homeside stepped trail commission structure was launched back in 2007, remunerating brokers fairly for the additional work they undertake maintaining those long-term relationships. A key benefit for your business is that the Homeside stepped trail commission structure is based on the life of the customer and not the life of the loan. now, three years have passed since the launch of the structure and in August brokers would have seen the first of their customers generate 30 basis points trail commission. brokers maintaining their customer relationships over 4 years will see their rate increase to 0.35% from August 2011. Mark Harper, Principal of financial Management, Victoria, is one such broker making the most of the Homeside commission structure. Mr Harper stresses the importance of a commission structure that rewards brokers for their work in building a successful client relationship. ‘if you want to build a successful long-term business then a rewarding commission structure is what you need’, says Mr Harper. ‘Commission structures are generally ineffective if lenders start the clock again every time you increase a loan. nAb broker doesn’t do that – the bank encourages you to keep clients with their products.’ Mr Harper however is quick to point out that a broker’s offering is only as good as the products that he/she is equipped to sell. ‘As a broker, my priority is to source what i think is the best loan for my customers – nAb broker has got a great product with the Homeside Homeplus facility and the bulk of my business goes that way.’ ‘As a small broker business owner it’s pleasing to see that with nAb broker you’re going to be rewarded in the long run.’ The below scenario demonstrates the benefit of the Homeside stepped trail commission structure. CommissionsPayable 1 2 3 4 5 6 7 8 9 10 $900 - $800 - $700 - $600 - $500 - $400 - $300 - $200 - $100 - $0 - ----------- Years other lender Homeside if you write business with Homeside today for a new customer with a $300,000 loan, then the value of the trail commission on this loan increases over time. The above graph illustrates the commission you would earn on the loan, based on the assumption that the balance is reducing at 5% pa and the other lender’s trail commission is 15bps pa. a stepped commission structure based on the life of the customer, not the loan. the importance of a step trail commission structure homeside trail commissions structure First loan start date Commission Paid Year 1 Year 2 Year 3 Year 4 Year 5 Year 6+ Pre 1 July 2007 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 1 July 2007 – 31 July 2008 0.25% 0.25% 0.25% 0.30% 0.35% 0.35% Post 31 July 2008 0.00% 0.15% 0.20% 0.25% 0.30% 0.35% New NAB ad.indd 2 24/11/10 5:25 PM
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07