What is a Referrer Mandate?
Some mortgage brokers and referrers charge a fee to their customers which is referred to as a ‘mandate’. This fee can be charged upfront in order to gain commitment from the client for the use of the referrers’ services. This is to make sure the referrer is compensated for the time they spend on the customer’s application even though it may not eventuate into a settlement.
When is a mandate agreement signed and charged?
Once the client and the referrer have a verbal agreement that the client is to engage the broker or referrer to complete a transaction, the mandate agreement is signed to clarify all fees and conditions of engaging the broker. They are required to notify the customer in writing that they charge a fee for their service.
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Some referrers collect a percentage of the mandate upfront and the balance is collected after settlement, however, others may charge the full amount at settlement
Why do some brokers or referrers not charge a fee?
Referrers who don’t charge a fee to the customer do so because they consider the commission paid by the lender once the loan settles to be sufficient or they are confident of the clients’ commitment to them.
Using a Referrer Mandate for a PMA Loan
Referrers have the ability to nominate a Service Fee of up to 1.00% (plus GST) if they don’t have a signed mandate. If a referrer has a signed mandate then this amount will be included in the Indicative Letter of Offer. Any variation on the above needs to be agreed upon in writing by PMA and the Referrer.
We can provide referrers with a mandate agreement template. To receive a copy, you may send us a message at our Contact Us page.
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