Mortgage Broker FAR fee

Leon12 · 30 November 2017 at 5:37PM

Hi All,

I am dealing with a mortgage broker at the moment who seem OK but they have a fixed rate fee of £699 for arranging the mortgage which is payable on completion. In the Mortgage Illustration document they have given me they refer to this fee as a 'FAR Fee' so does anyone know what a 'FAR fee' is?

Also they have proposed adding that £699 cost on top of the mortgage as opposed to me just paying it directly to them? Any thoughts or ideas as to why they may be proposing doing it like this?

Many thanks,

Leon

kingstreet · 30 November 2017 at 5:45PM

I take it the firm's initials aren't F A R?

ACG · 30 November 2017 at 6:00PM

Ask the broker these questions?
I would prefer my customers to come to me and ask about anything like this. You are paying them £700 after all.

amnblog · 1 December 2017 at 8:35AM

Leon12 wrote: »

Also they have proposed adding that £699 cost on top of the mortgage as opposed to me just paying it directly to them? Any thoughts or ideas as to why they may be proposing doing it like this?

Probably because they feel they have a sounder chance of getting paid that way.

Not a policy we use, but simply a case of you deciding whether to borrow an extra £699 or not? Adding any fee to the loan means you will pay interest so it will cost you more in the long run.

Neutrinno · 1 December 2017 at 11:25AM

Leon12 wrote: »

Also they have proposed adding that £699 cost on top of the mortgage as opposed to me just paying it directly to them? Any thoughts or ideas as to why they may be proposing doing it like this?

I'd imagine they have done this as this is the preferred method for customers to pay broker fees due to the size of them.

They should however be gaining clear consent from you upfront on whether or not you want fees adding to loan, adding fees increases the amount of interest you'll repay on the mortgage.

dunstonh · 1 December 2017 at 1:55PM

Also they have proposed adding that £699 cost on top of the mortgage as opposed to me just paying it directly to them?

You should be given the option of paying it as a bill or adding it to the mortgage. If you being encouraged to add it to the mortgage without the opportunity to pay it instantly then that would be considered a missale. The FOS have ruled on these in a number of cases. They have no issue with it being added to the mortgage as long as you are made aware of the choice and consequences. They also prefer it is added to a sub account with no tie in allowing you to pay it back without penalty after the mortgage is advanced. However, that is mainly in cases where it was recorded on the documentation that you intended to pay the fee via the mortgage but repay that bit earlier than the mortgage term.

Leon12 · 1 December 2017 at 6:07PM

Thanks all.

The firms initials are not F.A.R so I can only assume it is some kind of broker industry terminology but in any case it is clearly their set fee for the work they are doing in finding the mortgage for me. I will ask them to confirm exactly what it means in any case.

I am also going to insist that I pay it separately as I do not want the fee added to my mortgage and therefore gaining interest on it as some above have correctly said.

Thanks again for the help.

Leon

dunstonh · 1 December 2017 at 6:35PM

The firms initials are not F.A.R so I can only assume it is some kind of broker industry terminology

Its not broker terminology.

When a firm abbreviates something, its either something that is well known for using initials or something that was referred to earlier in the same document (to save repeating more words than necessary).

Just chuck them an email and ask them what FAR stands for. And then let us know the answer!

Mortgage Broker FAR fee

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