Fees - Mortgages Brokers and Estate Agents

Ian_Griffiths_Halifax

Thanks for that dwsjarcmcd and I think you raise some very valid issues there, namely that the public don't seem to hve a clear picture of what a broker does.

I have clients going back over 18 years. They can't all be wrong and I've lost very very few over that time.

The argument over fee charging and non-fee charging brokers has been debated on here many times and it's mainly argued by brokers them selves. It's become apparent to me that the lower average value areas, such as West Yorkshire, South Yorkshire, North East etc you will find a broker more often than not charges, whereas in the Midlands and South there are more fees free brokers as the average mortgage value is higher and so the average procuration fee is higher.

One thing I don't personally do is rely on or expect any Life Assurances etc being taken out through me, but that is what many non-fee charging brokers do.

GDB2222

Maybe I was a bit glib before, so maybe you should tell us what a mortgage broker actually does? I must admit to never having gone to one.

Do you advise on life/sickness cover as well as the mortgage?

Can you explain what you do that a client cannot do for himself, using say MoneySuperMarket?

Unless your client is illiterate, I cannot see that they need help with filling in the forms. I must say that I find it annoying to sit with someone who says "what's your DOB?" Give me the *** form and I'll fill it in myself!

Likewise, with chasing up the lender, surely the client can do this?

GDB2222, if you think that all a Broker needs is a computerised list of mortgage providers, then you are sadly mistaken and that is the mistake that people make them selves when they try and do a mortgage themselves online. There is more to mortgage advise than finding the lowest interest rate or the lowest monthly payment.

You need to be able to explain much more clearly what you do do, and what the benefits are to the client. Otherwise, the clients aren't going to value your services, simply because they can't see what value you are adding.

How long does an average case take you, and what hourly rate do you aim at? Do larger mortgages take more time to effect? If not, why should you be paid more for the larger ones?

Finally, mixing commissions and fees is complete anathema to me.

Strapped

I'm not sure that people are that adverse to paying a fee, so long as it saves them money in the long run. I think that the people on MSE, though, are not your typical sample of the general population and generally represent those who are more willing/able to have a go at making their own comparisons and calculations and therefore may see less value in using a (fee-charging) broker. The only circumstances in which I could personally envisage using a fee-charging broker would be if they had access to deals that I could not secure as an individual, for example.

Ian_Griffiths_Halifax

GDB2222 wrote: »

Maybe I was a bit glib before, so maybe you should tell us what a mortgage broker actually does? I must admit to never having gone to one.

Ok, here goes and I'll try not to make it too long winded.

Brokers can get deals which the lenders don't make available to the public, but there are also deals that the public can get which aren't available to the brokers.

Often (recently) the reason the lender doesn't want you to go though a broker is so that they can sell you their ridiculously over priced add on products.

A good broker will make you aware of what other products you can get, what you need, what to steer clear of, what is essential and how much it costs.

I, and I'm sure others have also, negotiate on purchase prices on behalf of client. Many feel cheeky in bartering!

We visit clients daytime, evening and weekends, often assisting with legal papers from either their own solicitors or lenders own solicitors. Again daytime evening and weekend, and not earning anything for this extra work.

We can steer clients away from useless lenders who advertise low rates with high fees or low rates with low fees with bad service standards and response times.

We know lenders key selling points. Things they do that others don't etc.

There is NO protection for the clients if they take a NON-ADVISED sale direct through a lender, whereas they have protecton with an ADVISED sale through a Broker (non-advised sales are available through brokers, but should be stopped IMO).

Comparison websites are notoriously unreliable and often out of date. Many (unbelievably, including the FSA's own Moneymadeclear website) don't even ask you what your income is. Even if they ask, they often don't ask you to break it down, as some may not be allowable or only a %age of it.

Many websites don't take ALL costs and savings into account to find the TRUE cheapest overall mortgage. Again, there is more to a mortgage than getting the lowest payment or lowest interest rate.

Clients often find it hard to get hold of lenders and are bamboozled by jargon and forms etc. Having somebody who can make the calls for them, helping to explain the documents and filling in forms takes a lot of that pressure off the clients.

We help clients to make decisons over such as, the right term to take a Fixed Rate, whether they need an offset mortgage, flexible mortgage or a standard mortgage with a facility to overpay but with a better interest rate etc.

Helping clients to look ahead at what is happening with their life, employment, kids going to uni, loans coming to an end that will then allow for mortgage overpayments, future expenses like car purchases so we don't set mortgage payments too high now, etc etc

Giving industry views on what is likely to happen with rates in the forseeable future (not something that's been easy to do recently).

Do you advise on life/sickness cover as well as the mortgage?

Yes when it's needed and I also tell clients when what they have is adequate or not necessary.

There is a lot more to the services of a Broker and good Brokers vary massively from poor ones. The ones who fill out the forms and you never see them again for example.

It's very hard to quantify the full range of services that a good Broker provides as he will usually bend over backwards to sort out whatever it is needs doing, even if it's something he's not come across before, as a good Broker will always want to keep his client happy.

GDB2222

Hmmm, I'm puzzled by your reply. It seems to me that you certainly go the extra mile for your clients. However, some of it is clearly not really related to the main job, eg negotiating the property price. Assisting with legal papers: do your PI insurers know you do this? If you stuck to the basics, you'd be spending fewer hours and could perhaps reduce your charges.

Of course, at the moment, what you need is more clients, and I am pretty sure that increasing your charges would be a bad move in today's climate.

Ian_Griffiths_Halifax

This is the problem it seems. People think that all a Broker does is tap a few numbers ina computer and hey presto, there's a mortgage.

I'd not be able to cope if I had any more clients to see TBH. I'm busy night and day seeing people and I'm desparatley looking for another advisor, but that isn't the subject of the question.

I'm debating the argument for paying Brokers a reasonable fee. Eventually the lenders will stop paying procuration fees completely and all those brokers out there who currently don't charge will have problems. By which point the public will have had it drummed into them that Brokers get paid lots of money by the lenders and so they shouldn't be paying them as well.

huntersc

My IFA is happy to work without charging me a fee. The moment he says he wants to charge me, I'll look at the service he provides and see whether it's worth paying.

Personally I would say that the IFA makes life a little easier but it's not an essential process as part of the house buying process. Indeed on my last purchase I got a better rate direct than through him. Ultimately my IFA saves me time. I could look at every mortgage provider, check rates, redemption penalties, terms and so on and then play them off against each other but I can't be bothered. I'll let my IFA pick up his fee from the bank for doing it.

If the lenders stop paying IFAs then of course they will need to charge. Whether people will pay it depends on how much they want to charge. £1k? Perhaps. Above that I'll just go direct to the lender.

BTW, I don't think that all lenders will stop paying commissions. Many of them would not get the exposure they need without brokers. Those that don't need exposure don't really care about IFAs anyway, they never give them the best rates, some don't even deal with them. I think HSBC is an example of that.

GDB2222

How come you be busy night and day? I thought the number of mortgages granted has gone through the floor. Are you busy servicing your existing client bank? Good luck finding a helper.

Ian_Griffiths_Halifax

GDB2222 wrote: »

How come you be busy night and day? I thought the number of mortgages granted has gone through the floor. Are you busy servicing your existing client bank? Good luck finding a helper.

I have around 3,000 existing clients, referrals and recommendations. I get referrals from Accountants, IFAs and happy clients. I'm ripping my hair out most days and then I spend my 'rest' time on here. What a sad life I lead. :embarasse

Having said that, I wouldn't change it for anything. The buzz I get from helping people is too good.

MarkyMarkD

Ian_Griffiths_Halifax wrote: »

Often (recently) the reason the lender doesn't want you to go though a broker is so that they can sell you their ridiculously over priced add on products.

I'm not convinced by that explanation.

The reason that lenders have started to price discriminate against broker business is simply that they don't need the broker business. They have limited funds to lend, and they can lend them successfully via their direct channels. Their direct channels are a fixed cost, and might as well be selling mortgages rather than twiddling their thumbs.

So selling a mortgage direct - at zero marginal cost - is significantly cheaper than paying a procuration fee to a broker.