Brokers & Direct Deals

ultramagnetic_commuter

I saw a whole of market broker recently. He searched through his system and came up with some deals. I had seem some slightly better deals on banks own websites and he said he could get those for me but would need to charge a fee (£300) because he wouldn't be paid by the lender for those. Looking into it more, it seems quite of lot of the good deals are 'direct only'.

So my question is, is the broker allowed to apply for these direct deals on my behalf (is this normal practice)?

Secondly, do people see it as a major benefit having a broker do my application (for £300) rather than doing it myself? I've good credit, big deposit, sensible numbers based on salary so should be straightforward. I guess I don't want to regret going it alone.

dwsjarcmcd

The broker would apply for it in your name, essentially they would fill in the application form by asking you the questions and you would check and sign it.

In my opinion, there is no benefit in using the broker if you have sourced the deal yourself and it is a straightforward case. In reality you are paying £300 (which to be fair is not an unreasonable fee) for someone to fill out an application form. You would still need to supply the documentary evidence to either the broker or the lender direct.

lindos90

I have just been wondering the same, as a mortgage advisor from our estate agent has recently told us which 'special deals' he can get. All of them are more expensive than the ones we can get ourselves by going direct, and we would have to pay him a £500 fee (as well as the product fees etc of the mortgage of course), I was beginning to think we were being stupid and had missed something really important by considering going direct.

We sound in a similar position to you Ultra, having a deposit from equity of over 50%, (fingers crossed;)) so we are looking at the 5 year fixed rate 'better deals' on the web sites, maybe mortgage brokers come into their own when it comes to higher lown to value deals?

dunstonh

So my question is, is the broker allowed to apply for these direct deals on my behalf (is this normal practice)?

A whole of market adviser will typically only look at the deals that pay commission. An independent mortgage adviser working on fee basis will look at all deals whether they pay commission or not (and if they pay commission, will use it to offset the fee).

Secondly, do people see it as a major benefit having a broker do my application (for £300) rather than doing it myself?

Can you DIY or do you need the help?

as a mortgage advisor from our estate agent has recently told us which 'special deals' he can get.

Apart from a few independent estate agents, you should never use an estate agent adviser. Many are tied for insurances or limited panel and they also tend to have the worst reputation (sorry for the good ones).

lindos90

dunstonh wrote: »

Apart from a few independent estate agents, you should never use an estate agent adviser. Many are tied for insurances or limited panel and they also tend to have the worst reputation (sorry for the good ones).

Yes, Our EA is a local one, (quite big in the area though) and almost 'insisted' we have an appointment with the in house mortgage provider before they would sign us up to market our property! (along with pushing their HIPs and an 'introduction' to their local recommended solicitor)

I know they are a busuiness and need to make money, but there will be commisions behind these for sure.

If its a good deal for me financially, then I would be quite happy to consider this, but when you can get better deals, and not have extra fees/commision, then why not?

ultramagnetic_commuter

One of the things which put the frighteners on me was that the mortgage advisor knows the lenders and knows if their criteria is overly strict for example and I'd be declined. I might go ahead and apply for that mortgage and end up with that black mark on my credit rating. Although I have good LTV etc.

There is also an element of guilt! I spent probably an hour with him and it was only at the end when I asked about direct deals he said I would need to pay a fee. I feel slightly uncomfortable not going ahead now - but I guess I'm too nice!

ps lindos90 - We sound in very similar positions - I'd be interested to hear about the best 5 year fix you've found.

lindos90

ultramagnetic_commuter wrote: »

One of the things which put the frighteners on me was that the mortgage advisor knows the lenders and knows if their criteria is overly strict for example and I'd be declined. I might go ahead and apply for that mortgage and end up with that black mark on my credit rating. Although I have good LTV etc.

There is also an element of guilt! I spent probably an hour with him and it was only at the end when I asked about direct deals he said I would need to pay a fee. I feel slightly uncomfortable not going ahead now - but I guess I'm too nice!

ps lindos90 - We sound in very similar positions - I'd be interested to hear about the best 5 year fix you've found.

Agreed, and I also thought that if my EA knew how much we could 'afford' to borrow, then they might push us into accepting a lower offer on our property if that makes sense. I want to borrow what I feel comfortable with repaying, not be borrowing up to my neck.

I'll PM you.

dunstonh

lindos90 wrote: »

Agreed, and I also thought that if my EA knew how much we could 'afford' to borrow, then they might push us into accepting a lower offer on our property if that makes sense. I want to borrow what I feel comfortable with repaying, not be borrowing up to my neck.

In many cases, if the estate agent mortgage adviser tells the estate agent your details, it can be a breach of data protection. It happens though.

Yes, Our EA is a local one, (quite big in the area though)

Doesnt make the mortgage adviser independent or fully whole of market in all classes of business.

Have you checked to see if your mortgage adviser is whole of market in mortgages and insurances or just mortgages?

lindos90

dunstonh wrote: »

In many cases, if the estate agent mortgage adviser tells the estate agent your details, it can be a breach of data protection. It happens though.

Im sure it does, how could anyone prove or disprove a converstation between two members of staff in an office miles away!

dunstonh wrote: »

Have you checked to see if your mortgage adviser is whole of market in mortgages and insurances or just mortgages?

My OH asked if he represented only certain companies, and he said he looked at 'most' of them, but some banks reserved some deals for direct application, which he therefore could not do, he didnt mention anything about insurances so hes probably a broker rather than FA I guess.

Maybe OH should have asked what his official title was. It was interesting though, that he only seemed to be showing us products from one place, which made us wonder if he did actually represent only a few companies, if that was genuinly the best deal he could get from anywhere, or the one that provided him the most commision.

Oh how I hate mistrusting people!

dunstonh

My OH asked if he represented only certain companies, and he said he looked at 'most' of them, but some banks reserved some deals for direct application, which he therefore could not do, he didnt mention anything about insurances so hes probably a broker rather than FA I guess.

He has a legal requirement to tell you his status for mortgages and insurances. A lot of "dodgy" mortgage advisers use their whole of market mortgage access to give the impression they are whole of market in all areas.

If the adviser has not pointed out their insurance status then they have breached regulatory requirements. That should tell you something about the broker/adviser.

It was interesting though, that he only seemed to be showing us products from one place, which made us wonder if he did actually represent only a few companie

It sounds like tied or limited panel then. Remember that the remit of an independent is to represent you. The remit of a tied or mulit-tied adviser is to represent their employer. A tied/multi-tie doesnt have to sell you the best product. An independent does.