Broker's "Lifetime Fee"

fdl8

Hi,

I have been quoted £299 as a lifetime fee by a mortgage broker. This would be payable before completion of my current house purchase but it does mean that he will continue to act on my behalf on the current purchase if it does fall through and also any purchases I make in the future, for no extra cost. I am a first time buyer so have very little knowledge of this kind of thing. Is this a good deal?

Thanks in advance!

herbiesjp

Er - gimmick!

Most brokers would do this anyway, as a matter of course

Some brokers offer a fee free service

Peelerfart

Methinks this is the kind of thing which gives brokers a bad name !.

Bin him and get a proper one IMHO

koexelek

fdl8 wrote: »

Is this a good deal?

Sounds like it is for him :cool:

Dan_1976

Depends how you look at it and how he acts on it. If it means he will service your financial requirements year in and year out and review your situation every year or two why not. If its a gimmick and he is never to be seen again then kak!

It also covers his work if you decide not to go ahead or waste his time.

I knew a few IFA's that charged these and also annual retainers.

koexelek

Dan_1976 wrote: »

Depends how you look at it and how he acts on it. If it means he will service your financial requirements year in and year out and review your situation every year or two why not.
.

it's in any brokers interest to do that anyway, whether they are paid a retainer fee or not.

If he can't be ars-d to review your mortgage in two years time, plenty of other brokers will be

dunstonh

Keep well clear from this type of fee. Its a gimmick and sounds good but remember that they get paid commission every time you remortgage so its an incentive to go back to them. Using an independent mortgage broker or a fees free whole of market broker would be better and cheaper.

I knew a few IFA's that charged these and also annual retainers.

The difference with that is that the FSA ask to see evidence of servicing with these fees and the things IFAs deal with require more serving. Portfolio rebalancing for example. Something the FSA is really insisting on IFAs doing.

An adviser taking a retainer but doing no work for it would find the FSA taking action and a firm I know is currently having to refund a load of fees for not being able to evidence work done. He just couldnt prove it in all the cases sampled with documentary evidence. Indeed, because of him my network has recently issued a load of new guidence on fees and charges.

greatsite_2

My son's broker said he did not charge first time buyers but others he charges 299 pound

dunstonh

A one off fee is acceptable. Especially when commission is rebated and the advice is independent. Or when the area is one of small mortgages where a mortgage adviser cannot afford not to charge a fee. Not unusual in my location where mortgages of £40k or £50k are quite common.

The OP is referring to a fee that is for something different.

herbiesjp

koexelek wrote: »

If he can't be ars-d to review your mortgage in two years time, plenty of other brokers will be

Exactly - it's crazy

Brokers should be falling over themselves trying to keep/help their current clients, even if that mean advising to stay with their current lender or go direct.

That goodwill, although paying nothing, means building up a great relationship and clients always come back to you as they value your honesty

NOt trying to make some money upfront, only to disppear in a few years!

Ian_Griffiths_Halifax

This type of fee arrangement will not work in the long term as there is increasing likelyhood of lenders stopping paying introducers fees (commission). This broker is expecting that he will be able to do your mortgage in the future and still get paid by the lender and not need to charge you. That probably won't be the case at some time in the future, so how will he be able to look after you and not earn money from you OR the lender. The only way he'll be able to do it is by selling you some other add on service such as Life Assurance, but to continue earning each time you do a mortgage with him, he would need to sell you a replacement or new policy each time, which might not be best for you.

I have around 5,000 client who have only ever paid me once for arranging them a mortgage, and that is due to the lender paying us procuration fees. If lenders stop paying the procuration fees in the future I know I will have to charge the clients in order to be able to afford to do them a service.