mortgage broker/financial advisor

garryo

can anyone shed any light as to what the difference is between these please?

does a broker not charge you a fee and and a financial advisor charge a fee?

another question ive got aswell.....whats an arrangment fee?

cheers!

payless

The terms broker and financial adviser are now commonly interchanged

Some charge fees, others don't ...

Sometimes a service is worth paying a fee for

Independents have to offer a service whereby a fee is charged but commision rebated ( sometimes that could mean a profit for the client over commisssion based service)- many offer it as extra service level over and above commission ( on top of which they may or may not charge a fee)

fees ( if any) should be listed in an "Initial Disclosure Document " / IDD / About our services form, and agreed upfront before chargeable work is commenced

Arrangement fees - usually relate to the lenders fee for the product
( generally rising , as less is made on the interest)

stanmoresaver

garryo wrote:

can anyone shed any light as to what the difference is between these please?
does a broker not charge you a fee and and a financial advisor charge a fee?
another question ive got aswell.....whats an arrangment fee?

cheers!

A mortgage broker can be a financial adviser and the other way around- depends on their business and their qualifications and experience

Either can charge you a fee for their services.

Normally an arrangement fee is the fee paid to the lender ( or added to the loan) for setting up the loan.

HTH


(payless has pipped me to the post!)

SS

dunstonh

The advice regime is split in to three main areas.

1 - investment advice
2 - general insurance/protection
3 - mortgage advice

You can be licenced in one, two or three areas. If arranging a mortgage, you need to see someone with number 3. They can also be an IFA. However, an IFA does not need to have number 3. I don't do mortgages for example. A mortgage advisor would normally have 2 and 3 but not number 1.

does a broker not charge you a fee and and a financial advisor charge a fee?

If an IFA is in front of you discussing a mortgage, they havent got their IFA hat on but mortgage advisor hat. There is, therefore, no difference between the options available. Some mortgage advisors make a charge, others will not. Some will make a charge but take no commission, others will not.

another question ive got aswell.....whats an arrangment fee?

A fee for arranging the mortgage.

garryo

is a £200 fee reasonable?

i thought they got paid off the bank?

stanmoresaver

if it's the broker fee, then depends on the loan size and complexity.


But from my point of view it's very low.;)
If it's a lenders arrangement fee it is low!

AndrewSmith

Depending on the particular case,

But I dont see £200 as particulary high. Bear in mind that the broker will only get paid by the lender if the mortgage actually completes. If the mortgage does not go through or you pull out of the house purchase etc , the broker / advisor gets nothing.

Consider also that the average mortgage case will involve something to the order of 20-30 man hours of work by the broker /advisor. If we charge the same scale as a solicitor this would incur fees of almost £3,000 per case. Luckily for the consumer we do not, and our commission level is a mere 0.35%-0.5% average per mortgage, or £350 - £500 per £100,000 mortgage.

There are some circumstances where the commission rate could be higher (adverse credit lenders etc) however the quoted figure is what will be paid in 95% of cases approx.

Andy


P.S. Hi Dave, Payless, Dunstonh :beer:

garryo

thanks for that everyone....

figures i've been quoted from an advisor is

£200 for his fee

£499 for arrangment fee

the mortgage is for £120,000

does this sound about right?

payless

Assuming thats £200 + whatever commission - as mentioned , many advisers will do this without a topup fee, although if you feel comfortable with this adviser and think he will add value to the transaction , then I don't think £200 is OTT - did he come on recommendation? does he use whole of market for lender? , tied for insurances?

garryo

think he will add value to the transaction

what goes this mean?

payless

Well could mean all the extras - home visits, out of hours , regular contact, obtaining agreement in principals ( we hear that some tel brokers don't like dealing with people without a property agreed ) dealing with solicitors & estate agents

Also how the broker might spend time explaining the different products and how that fits in with your needs

Now some brokers might be happy to include all of that in their no fee service, others charge , the again some others charge but then don't offer as good a service.

Its what you feel comfortable with..