Martins View On Using Mortgage Brokers...

berniedewsbury

The situation with IFA's is a nightmare. The new rules on IFA's from 2013 will make things better for consumers and squeeze the bad IFA's out of the market. But I think a lot of people are going to struggle to find the fee's that the remaining good IFA's are going to want.

In the meantime there are some good tips on ratedadvisor.com on how to interview a prospective IFA. You need to speak to at least 3 to be sure that you are really confident that the IFA you select is the right one to compile all you needs and get the best deal for the individual.

dunstonh

The situation with IFA's is a nightmare. The new rules on IFA's from 2013 will make things better for consumers and squeeze the bad IFA's out of the market.

It will have little impact on mortgages though. Most IFAs no longer do mortgages (they use dedicated mortgage advisers). However, many of those that are no longer investment authorised from 2013 will become mortgage/insurance advisers.

But I think a lot of people are going to struggle to find the fee's that the remaining good IFA's are going to want.

I disagree. I have been fee based for a fair time now and in the vast majority of cases, the fees are lower than the commission. Whilst the bottom end of the market tends to pay more. Middle and higher net worth will likely be better off.

besti

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This will result in a 2 tier system where the rich can afford independent financial advice and the poor will be left prey to the banks who will tell them that their services are free but the fees are hidden. This time in 5 years time I think there will be probably 10% of the IFA's that are here today.

dazedandconfused_123

Just want to share my experience and hope it helps someone.....


We are coming to the end of our fixed rate product.
For one reason or another I don't want to remortgage to another company.
So I looked at the best available product on the lenders website and gave lender a call-at this point they told me they have some special rates for people who are existing customers coming to the end of their product-these are not on the website-and I imagine as they are not open to new customers a broker wouldn't see them.
So I've got a deal I'm happy with (2.79% for 2 years, no fee) and I don't think the brokers would easily beat.

No broker involved=saved money there-isn't that what this site is about?

I'm not saying discount brokers completely, just try your lender first.

Thats my experience-Hope it helps someone in a similar situation.

kingstreet

The first thing I do when researching a potential remortgage for a client is establish what their existing lender will offer them to stay. They get that together with the options for moving so they can compare.

We're not allowed to ignore the options offered by an existing lender and a section of our suitability letter would set out why the current lender's offer isn't considered acceptable.

travel_bug

Hi,

I was hoping for a little bit of advice. I am looking to buy my first house, I have 15% deposit, I am looking for a house around £180K, based on my salary I am confident I should be able to get the mortgage amount I require. Now heres the question...I don't know whether to use a broker or not. A friend has recommended a broker who lives in the Midlands (I'm in Watford) - he searches all of the market etc and has come highly recommended however his fee is £450. I like the idea of using a broker as this is my first mortgage and I want the best deal on the market but I don't know whether his fee is too high. I don't know whether it is best to have a broker more local to me, but the problem I have is that I don't know many people in this area so have no recommendations...

Please can somebody offer some advice, I would really appreciate it

Meeper

It depends on what you consider the value of the adviser to be.

If you consider that the adviser will be able to have a discussion with you and take out of your hands:

deciding the most appropriate mortgage structure
finding the most appropriate lender with a product to fit that structure
completing the paperwork
dealing with the lender, estate agent and solicitor on your behalf as much as possible to make the process as simple as possible for you

Do you value those things? You could find your own mortgage on many sites at the moment, but how would you know it was the best one? You'd simply be finding something that looked like the best and going for it yourself.

Do you value their service and what they may potentially bring in terms of perhaps obtaining savings on what you would have chosen, and what is actually the best option for you. Will come down to your thought process on the matter really, but I'm sure there will be plenty of people along in due course to tell you that advisers are pointless and you can do it yourself perfectly adequately. Only you can decide.

travel_bug

Thanks for the reply Meeper...I needed some clarity. I definitely would value the things you have mentioned, as it my first time buying I would like the help and advice of a broker to make it as stress free as possible!
In your opinion does it matter that he lives so far away so all of our contact will be pretty much telephone based rather than face to face? Also do you think the fee is reasonable?

Meeper

I don't consider that it matters a jot about being face-to-face. For the last 10 years I'd estimate that about 70% of my business has been conducted remotely.

Is the fee reasonable? Well.....it's hard to say. Will he also be receiving a commission amount from the lender? If so, will this be offset against the £450? There are many variables. Personally, if there was a purchase price of £180k with a 15% deposit (therefore a mortgage of £153,000) I would normally expect to get about £535 in commission from a lender for sending them the business. For me, this would cover your fee entirely and leave you with nothing to pay because the £535 he receives is more than the fee would have been. Some advisers, however, take the commission as well as the fee, which, in my opinion, is often a little excessive.

The only time I'd take commission and fee on a mortgage is if the mortgage is small and the commission due was only a couple of hundred pounds. I would likely in that case ask for a top-up fee from the client to make up the income on the case so that I'm not trading at a loss.

Hope that all makes sense.

M

travel_bug

Thanks Meeper, that did make sense and has helped a lot, I appreciate the advice. Just one more question...how can I find myself a reputable broker without any recommendations? Sorry for so many q's, I just want to do my research and do things properly