17 Jun 2024

When clients win the lottery for a new property or purchase of a second-hand property, they come to us for enquiry about mortgage cash rebates and referral services. However, we will not be able to refer the three major banks to them when they have already signed a mortgage referral letter with a real estate agent. Therefore, this document impacts on their mortgage application. Let’s explain why.

Sign a Mortgage Referral Letter

What is a Mortgage Referral Letter?

A mortgage referral letter allows a bank to pay a commission to the person who referred the client to the bank. The commission is paid to the referring person by the bank when the client successfully acquires mortgage and then the loan has been drawn down.

How Does Signing a Mortgage Referral Letter Affect Your Mortgage?

If a client signs a mortgage referral letter, the real estate agent will register as the referring person with the three major banks. Even if the client later asks our company, StarPro, to refer them to these banks, the banks will not recognize StarPro as a referring person because of the pre-signed letter. The commission goes to the real estate agent instead, so StarPro cannot offer any cash rebate to the client.

Can You Still Use StarPro for Mortgage Referral After Signing the Letter?

Fortunately, only the three major banks allow the real estate agents to quickly register as the referring person (a practice known internally as “flag planting”). In contrast, other banks do not allow this procedure. They will only recognize the referring person indicated on the mortgage application form submitted by the client. Thus, if you apply for a mortgage of other banks, you can still appoint StarPro as the referring person and earn extra cash rebate.

What Would Happen if You Didn’t Sign a Mortgage Referral Letter but Got “Flag Planted”?

Some agents may tell clients that signing the letter provides free mortgage information or prompt contact from bank staff, or they may offer coupons as incentives. Clients might sign the letter without fully understanding. Please always read and understand any document before signing.
In some cases, clients report that they never signed a referral letter but still got “flag planted.” This might happen because the real estate agent, having all the buyer’s information, could secretly send it to the bank to register as the referring person.

How to Protect Yourself as a Buyer?

If you plan to use StarPro for mortgage referral after buying a property, do not sign any referral documents with real estate agents or other intermediaries. You should tell the real estate agent that you will apply for the mortgage yourself and carefully check every document before signing during preliminary contract signing procedure. If you plan to apply for mortgage of the three major banks through StarPro and you are not sure whether you have been “flag planted,” you could ask the bank or StarPro mortgage specialists to verify when your identity has been registered.

What Would Happens If You Sign a Mortgage Referral Letter for Unpaid Land Premium Home Ownership Scheme (HOS) Flats?

For unpaid land premium HOS flats, the three major banks are the most lenient banks, accepting government guarantees, allowing applicants to skip stress tests, and offering the longest repayment terms. If you sign a mortgage referral letter with an agent, you must apply for a mortgage through the agent with these three banks and miss out on the extra rewards.

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