Martins View On Using Mortgage Brokers...

calebdylan

the view on brokers is nice .... i accept that we need to gather some details before involving in any type of mortgage loans ....where these details are available in abundance with the brokers ..... some may expensive but the details and benefits are also huge......

chickpea87

Myself and other half are soon to be arranging a mortgage in principle, I have asked friends and family and none have any recommendations due to bad experience/bought a house a long time ago. We live in Warwickshire, are there any tips/guidance/recommendation regarding choosing a mortgage broker? I'll get on looking through the threads :-)

nico1977

Hi

I have been a Mortgage Adviser for around 7 years now and over this time the market has changed subsantially. Historically I never charged as I got the commission from the lender. However over the past year or so more and more products are direct to consumers only and therefore do not pay the broker a fee. In my opinion to always give best advice you should research the WHOLE market not just the products that pay a commission.

From a business point of view you could do many hours work for nothing when you then go back to the client and recommend a product that doesn't pay a commission. Each broker works differently and my personal view is that if a commission is paid that is reward enough, but if no fee is paid you should be paid for your expertise and advice.

This is just my opinion and how I now conduct my business and so far this seems to be accepted by my clients. The key is ensuring the advice you are getting is 'Best Advice' and if a fee is charged you are getting value for money.

Using a broker has huge benefits if you get the right one. Having a point of contact should you need any help, ongoing reviews as and when needed and also when your deal comes to an end someone to turn to who already is aware of your circumstances.

frankw5

I think the best way to do it is to find a broker that will charge a fee but refund it if they get a commission. I know someone that spent £250 to get a mortgage from nationwide and as far as I know, they pay commission. SO that broker got paid twice, not good rpactice in my opinion.

nico1977

I agree with you on that. That is the way I do things and I feel that is a fair way.

phillonc

Having read a handful of threads on this subject. I find it interesting that there is so many different equations and scenarios to look at.

Before you speak to a broker, they will have to provide you with an Initial Disclosure Document (IDD).

The IDD will disclose their rates and charges, also disclosing how much you will be refunded.

Here is an example of the text of an IDD

---

1. The Financial Services Authority (FSA)
The FSA is the independent watchdog that regulates financial services. Use this
information to decide if our services are right for you.
2. Whose mortgages do we offer?
�� We offer mortgages from the whole market.
We only offer mortgages from a limited number of lenders. Ask us for a list of the
lenders we offer mortgages from.
We only offer mortgages from a single lender.
3. Which service will we provide you with?
�� We will advise and make a recommendation for you after we have assessed your
needs.
You will not receive advice or a recommendation from us. We may ask some
questions to narrow down the selection of products that we will provide details on. You
will then need to make your own choice about how to proceed.
4. What will you have to pay us for this service?
No fee - We will be paid by commission from the lender.
�� A fee of £100.00 payable at the outset, 1.00% of the loan amount payable on
application, £150.00 payable on receipt of a mortgage offer, 1.00% of the loan
amount payable on exchange of contracts and £200.00 payable on completion with
any commission received from the lender rebated back to you.
A fee of £100.00 payable on exchange of contracts. We will also be paid commission
by the lender.
You will receive a key facts illustration when considering a particular mortgage which will
tell you about any fees relating to it.
5. Refund of fees
If we charge you a fee, and your mortgage does not go ahead, you will receive:
�� A full refund If the sale falls through.
�� A refund of £200.00 If you lose you job.
�� No refund If you decide to pull out of the deal.
2
6. Who regulates us?
ABC, x, x, x, x, x, w4 4yu is authorised and regulated by the Financial Services Authority.
Our FSA Register number is 123456.
Our permitted business is advising on and arranging mortgages.
You can check this on the FSA's Register by visiting the FSA's website
or by contacting the FSA on 0845 606 1234.
7. What to do if you have a complaint
If you wish to register a complaint, please contact us:
...in writing Write to: ABC, Complaints Department, x, x, x, x, x, w4 4yu
...by phone Telephone: 4
If you cannot settle your complaint with us, you may be entitled to refer it to the Financial
Ombudsman Service.
8. Are we covered by the Financial Services Compensation Scheme (FSCS)?
We are covered by the FSCS. You may be entitled to compensation from the scheme if we
cannot meet our obligations. This depends on the type of business and the circumstances
of the claim.
Mortgage advising and arranging is covered up to a maximum limit of £50,000.
Further information about compensation scheme arrangements is available from the FSCS

---

The example above are not figures used by an official Financial advisor. It is merely to demonstrate the sort of information that you should be displayed on the IDD.

If a broker does not provide you with this document then, you have the right to contact the FSA and complain about the broker.

There are a few terms that needs to be clarified:

The Whole of market, does not mean the broker is sourcing from the whole of the market, but is sourcing from 97% of the market. The FSA say's this is ok.

Some broker's (aka Independent financial advisor IFA) who are independent, often have a few select lenders that they will deal with. For example, always be on guard when a broker say's "I know the perfect product for you" when they haven't even completed your financial fact find.

If you do hear a broker mentions the above phrase, then ask them for a list of suitable products sorted by monthly pay.

If they won't provide you with a list of products, then ask how much is the lender paying you, what is "Procuration Fees" are you getting from the lender on this product.

If they won't tell you, then you can simply say thank you good day and leave their office.

The majority of the IFAs or Brokers will treat you fairly, this just a heads up on the things to be aware of.

Also with the IDD document, you should also be given another document called "Mortgage Glossary of Terms".

If you think this post was useful, please reply and I will dig out some more useful information.

macgirl

Hi there

I've got a house I want to let and my OH is self-employed - we want to buy another house together.

I've spoken to an IFA re: mortgages this week.
They are WoM, but charge a fee of £650 on completion. I got lots of advice over the phone, regards paying the BTL on Int. only (something I would never have done, but seems to make sense regarding tax). He thought my current deal (4.69% fix for 5 years) was decent and worth porting.
I've been advised to go to my lender, see what they'll offer me and OH together, then go back to the IFA who can then look for a BTL.

I did use L&C before, but ended up finding a cheaper deal with less fees myself. However, as this scenario is more complicated, I thought a broker/IFA would be better??

I did get a good vibe off him and he said he'd come round to our house - and that that would be free. Any thoughts are much appreciated

Peggy40

My mortgage is due for renewal. Last time I went to a independent broker (whole of market) but the fee was £300 which was added to the term of my mortgage! I have a straight repayment, and was advised to go with a base rate tracker ! This time around do you recommend I have the mortgage fixed for a longer term, and if this is the case, will the arrangement fee be higher ? :money:

Peggy40

This happened to me! Thought the IFA was a bit shady, but family recommended him - Wont be going back !!!

dunstonh

time I went to a independent broker (whole of market)
<snip>
Thought the IFA was a bit shady

So, what is it. Did you go to an independent mortgage broker, a whole of market broker or an IFA?

Independents will be fee based. Thats the whole point of using them. A £300 fee is very reasonable and if it means that non commission paying lenders are included in the research then you could easily end up saving more than brokers/advisers that are fees free but only consider commission paying ones.

This time around do you recommend I have the mortgage fixed for a longer term, and if this is the case, will the arrangement fee be higher ?

Depends. it could be but it may not be. Depends on what criteria you meet and what your circumstances are.