Martins View On Using Mortgage Brokers...

shaz77_2

MSE_Martin wrote: »

Of course there are ifs and buts. The two key questions to ask a broker are

"are you whole of market?"

and

"do you charge a fee?".

If the answers are yes and no then... whey hey hey... we're off to a good start. If the answer is anything else I would seek another broker.

I've probably missed something but surely all brokers would charge a fee for their services?

_Andy_

shaz77 wrote: »

I've probably missed something but surely all brokers would charge a fee for their services?

No, some just take the proc fee (commission) from the lender. (Plus hopefully commission from insurances/cross sales)

boldilocks

The Financial Services Authority dictates that if you want to use the word "independent" in your business name or description, you have to offer the client the choice of paying a fee. I am whole-of-market and don't charge any fees but I can't advertise that fact because I will be breaking the rules.

I have seen some horrendous broker fees being charged, so be very careful when you are looking.

This is FSA's idea of keeping things simple for the consumer.

dunstonh

boldilocks wrote: »

The Financial Services Authority dictates that if you want to use the word "independent" in your business name or description, you have to offer the client the choice of paying a fee. I am whole-of-market and don't charge any fees but I can't advertise that fact because I will be breaking the rules.

I have seen some horrendous broker fees being charged, so be very careful when you are looking.

This is FSA's idea of keeping things simple for the consumer.

Fee and commission does not mean independent. Fee only with commission rebated or offset is independent.

Most of the horrendous fees still seem to come from commission based advisers trying to double take the money.

mdhelp

Ian_Griffiths_Halifax wrote: »

The amount you can borrow is less important than what you can afford to pay back. Don't get sucked into the "Buy the most expensive house you can get, to impress other people" merry-go-round. Work out a budget on what you can afford to pay out per month and use that figure as your "reversion rate". That's the figure you'll be paying AFTER and incentive period ends.

Trouble is if you like an area you look at a few houses, along with some that are more expensive to see what you get for your money. Then you are seduced by the more expensive house...

But you are definitely right in what you say, so I think it is now down to the lender to be far stricter in their lending criteria as people will always want what they can't have (shouldn't have).

Simpmort

This site was recommended to me by a friend in 2007 and I always refer to it when I am buying something for the home and a few properties that I manage. So as a big fan I have to say I have read this thread with interest.

Brokers aren't all what they used to be. Thanks to exchange of experiences and open information in forums and the web in general, consumers are in a way helping to get rid of ‘bad’ brokers who may operate solely to line their pockets without concern for the applicant.
It’s a good thing that consumers are smarter these days and seek to make more informed decisions before they jump in head first with something as important and life changing as a mortgage.

Regards the confusion over fees and impartial brokers - as mentioned in other posts, Independent mortgage brokers have to state broker fee because this is a requirement of the FSA. And yes, the same broker will also be given commission from the lender that you decide to go with. However, we (independent brokers) now have to offer a choice of Fees Only in which case we would refund whatever commission we receive from the lender. So, the advice to consumers here is to really ask find out exactly what the fee structure is with the broker you are considering, and which bit is refunded or taken.

For example some brokers may charge an initial broker fee and then upon successful application, they would refund this fee but just keep the commission. remember here that this broker would have conducted whole of market sourcing to present you with all suitable options based on a fact find/your needs and circumstances and it would really be up to you what you felt comfortable with from the options presented. so, based on this there would be nothing wrong with the broker just taking the commission he is given from the lender who is essentially 'thanking' the broker for the sale, which would have been impartial remember.

It is a shame that 'commission' is such a dirty word and has been hooked on to anything broker related. Some (not all) people don't appreciate the amount of work that goes into sourcing the right product for the client in hand and that the 'commission' is like a thank you for the work done, from the lender, and, that at the end of the day, a broker needs to earn money somewhere in the process for the work that he or she does.

Overall I would say consumers should not be made to feel so fearful about brokers, but actually see the value in using professionals who have been doing their job for years.

Using a broker is all about being in a position to make an informed choice. If a consumer really feels they can do this themselves and do not want to pay some sort of fee for a professionals assistance or knowledge, then no broker is going to tell you that you are wrong to not take us up, but we are here to help. (It needs to be accepted that it will always be in the form of a business and not a charity)

moneymouth77

I find it hard to trust brokers, even if they are helping you sort out some of the recent payment and lending problems, they're still taking your money for a service that needn't be too drawn out or difficult, and could be done by you with a calculator.

Unless you have enough money and can't be bothered, I wouldn't recommend it.

barrysummers

i think you need to go with word of mouth. I have in the past been an independant mortgage broker but have been out of the industry for some time. I wouldnt trust half of them as far as i could throw them due to past knowledge. hoever i think the important thing is getting the right house at the right time. if you have a broker recommended to you by a trusted friend or colleague i would say thats the best way to find someone.

dunstonh

I have in the past been an independant mortgage broker but have been out of the industry for some time.

As an independent mortgage broker you were effectively the most professional type of adviser. Being fee based, the consumer is buying the advice and you are rebating or offsetting any commission. Therefore removing any potential for bias and also being 100% whole of market and not just including those that pay commission.

That doesnt mean a commission based adviser is not professional but by separating the commission and advice and having 100% access you ensure that you are giving best advice.

smitch999

I just wanted to say thanks Martin for the advice on the site which pointed me in the direction of using London & Country for my mortgage brokers.

I was very happy with the friendly and efficient service I received, and even happier with the excellent rate and offset mortgage package I am completing on tomorrow.

Another happy customer! :j