Mortgage brokers and clawback clause

[ak22]

Hi all,

Can someone please enlighten me on using a mortgage broker's services. When signing up with them for a home loan to be approved by a bank/finance institution, how long are you tied up with them (broker) before they can't ask you for any "clawback" refund?

Nothing was stated on the contract I signed with my previous broker regarding any clawback refund and no $$ amount clearly stated. Now broker is asking me to refund him due to "early repayment" of home loan taken out through their service.

The home loan was taken out through this mortgage broker on August 2018 for 1 year fixed loan. I then requested another brokerage firm to re-assess my home loans and decided to move my home loan to a different bank on March 2020.

I got an email from previous broker requesting me to refund him $$$ for the amount they have to pay back the lender due to my loan being "repaid (discharged) early".

If I need to pay them the amount, I am willing to do so but I need clarity and not blindly paying out money to something that doesn't make any sense to me.


Many thanks

[Keithw]

Cant help you with the specifics, but be sure understand the difference between the period of the loan (probably 30 yrs or so) and the period of fixed interest (1yr in your case)
You werent required to repay the loan when the fixed period ended, (it probably rolled over to floating), because the loan period is very different to the fixed interest period.
So check what the length of the loan was by reading your bank loan docs.
Then check the brokers agreement.
Ask them to provide the clause in their agreement that specifies the length of loan that triggers the early repayment clawback.

[ak22]

Cool! Thanks for that info Keithw.

I've got hold of the terms of agreement and it becomes tricky with the clause saying I will refund them x amount as a repayment clawed back by Lender if loan is repaid/discharged within 24 months (which is 1 year and 6 months for me).

I can ask proof of the refund to Lender by broker isn't it? I've rang the Lender to confirm this and they came back to me with "Commercial sensitive information" and privacy of information.

Cheers.

Cant help you with the specifics, but be sure understand the difference between the period of the loan (probably 30 yrs or so) and the period of fixed interest (1yr in your case)
You werent required to repay the loan when the fixed period ended, (it probably rolled over to floating), because the loan period is very different to the fixed interest period.
So check what the length of the loan was by reading your bank loan docs.
Then check the brokers agreement.
Ask them to provide the clause in their agreement that specifies the length of loan that triggers the early repayment clawback.