Mortgage Stealth Costs and Brokers

ukbondraider

So my girlfriend wants a mortgage that is 5 x salary.

One broker says 5.39% 5 yr fixed, 25 yr term (Northern Rock, any overpayments allowed, £1K cashback which will essentially cover arrangement fee etc).

She then visits another whole market broker to see if she can get a better deal.

Broker 2 is convinced he can offer a better deal. So he offers A%L 4.75% 5 yr fix. What he forgets to mention is that it is over a 40 yr term due to salary multiple and has a significant HIGHER LENDING CHARGE.

So my girlfriend not being very clued up decides to go for this 2nd deal that is until I tell her not to.

Why do brokers not tell the whole truth and what is it with this higher lending charge. Even if I borrow 100% I do not want any higher lending charges and the broker should know this. i.e stating a 4.75% mortgage with a HLC as 4.75% is not correct nor right as it is not 4.75% but prob over 5% in real terms especially if you intend to overpay and end the mortgage way before 10yrs. Also why would anyone want a 40 yr mortgage term if they have already stated they they already have an offer involving a 25 yr term. A 40 yr term will just significantly increase cost especially considering the A%L is not very flexible with overpayments.

Moral of the story is even with the FSA regulation, you really need to know a liitle about mortgages and still watch out for some of these brokers.

ukbondraider

Not all lenders have HLC so why dont brokers compare these mortgages with each other first. It really gets on my nerves to be told at the end "by the way the cost of taking out this mortgage with the 'better rate' is £10 million quid due to charges"

Barney088

I guess this experience is down to good brokers and bad brokers. The FSA and all paperwork they have brought is meant to stop brokers getting away with "the added fees" until it's too late so in some respects you have benefited from it.

I agree that these charges should be made perfectly clear to you and your girlfriend up front. There will be occasions where high fees may well be the best option and result in an overall lower total ammount payable. A good broker will do these sums. Pushing a mortgage over 40 years does seem a little daft without consultation.

Without wanting to lower the reputation of all mortgage brokers, the exams we pass are not rocket science and almost anyone with an aptittude to exams could pass them and in theory give advice. WHat makes the difference is the manner in which they give the advice and you have clearly been left feeling like someone is taking you for a ride and not giving you the full facts.

You can't beat experience in the industry and the experience of clients, making people feel comfortable and allowing them to have confidence in your ability is all part of the job.

There are many reasons why a 40 year mortgage with a HLC might be the most appropriate, I wouldn't discount it from searches, although I hate the principal of HLC and would try to aviod it, there will be circumstances when it is right.

dunstonh

Although the majority of brokers are fine, its the minority that cause a bad reputation. Mortgage regulation hasnt been going that long and it recently came to light that the FSA is not happy with the lighter touch regulation it brought in and is now looking to increase regulation to a similar level with designated investment class advisors.