A recently launched ‘refund’ model mortgage broker says it offers a similar service, but won’t make the same mistakes as defunct business Refund Home Loans.
Arctic Home Loans is offering to return up to 50% of mortgage brokers’ upfront commissions to home owners to help reduce their financial burden.
Arctic chief executive Eu-Gene Yeap, who aggregates through PLAN Australia, says commissions are usually around 0.5% to 0.7% of the loan amount.
"For many people, getting an injection of funds at this time will provide some welcome relief. It doesn't matter whether you are plunging into your first home loan, refinancing or buying another investment property, the refund will be a handy bonus," he says.
Yeap says he realises mortgage broking franchise business Refund Home Loans grew quickly under a similar strategy, but had failed because of its funding model. He says Arctic won’t be dealing with the same fate, because the online model will lower costs.
"We know our model works because we have been using it with another one of our businesses, ESN Financial Planning," he said.
"We have been offering upfront commissions back to consumers in regards to superannuation and insurance for some time. We are not a franchise model and have built Arctic on very sound financial principles.”
Yeap says the average Australian mortgage has grown considerably over the past 10 years, from $155,717 to $296,288 and that Arctic has access to 32 lenders.
"The loans we write are the same made by the banks or mortgage brokers such as Mortgage Choice or Aussie Home Loans. Our point of difference is that we give something back to the consumer for dealing with us."