been offered an abbey mortgage.. fees

myk3

Hi there,

I have used moneysupermarket.com to request advice for a mortgage. I got an informative call back from them then requested i fill in a mortgage promis form.

i get a positive reply advising me of the 2 best fix rate mortgages one which was abbey:

Lender: Abbey
Product: 5.79% fixed until 31/12/2012
Monthly Payments: £996.40
Term: 25 years
Repayment Type: Repayment
Mortgage amount: £170,000 + £995 arrangement fee
Purchase Price: £200,000
Incentives: Flexible overpayments, Portability, Valuation fees refunded on completion
Processing time: 4 weeks
Fees:

Valuation fee £0
Solicitors fee £795 (estimate) plus 1% stampduty
Mortgage advice fee £395 on completion

I understand all the fees apart from the one in bold. "mortgage advice fee".

I dont want to pay £395 for mortgage advise when i can go to abbey direct to get this and save that money. can any one advise if this is a fee which is apart of a mortgage or if it is indeed a sneaky charge that the advisor gets? (i assumed they get the cut from the bank if the mortgage is taken up).

also as a first time buyer any other advice for cheap mortgages to look at would be great!

thanks!

DJ_Mike

Yes this is your broker screwing you for all the cash he can get (well, should be impartial - might be a she).

Before that sounds like I'm being unfairly harsh to your broker - you should bear in mind that, for the size of your mortgage, Abbey will pay a commission to them of somewhere around £600-650 (this was what they paid under practically the same circumstances to my broker on completion only a couple of months ago).

My broker stated he required a fee of £295. Fair enough, perhaps. However, when I got my mortgage offer through, saw the commission of £680 on there, I went straight back to him and said - "You've been very helpful, but there is absolutely no frakking way you are worth £1000 - that's almost 3 times what my solicitors are charging me and they do all of the legal work!!!"

I threatened to walk and do it myself unless he waived the fee... He did. He still made £680 so I can't think he had much to complain about!

If you've had an Agreement in Principle (i.e. Abbey have sent you the paperwork), check through it and find out what Abbey will pay to your broker if you take out the mortgage.

If you haven't had an AiP yet, ask your broker what commission he/she's being paid by Abbey. If they aren't willing to be upfront about it, find another broker.

I should, in all fairness, point out that broker's fees are occasionally a worthwhile evil, if your broker is getting you a deal that isn't available on the "high street", as it were - sometimes brokers have access to deals which are released exclusively to brokers and no one else. From the sounds of it, yours is not one of these deals, so don't fret about this part.

myk3

mike thanks for your input! i thought this was the case! what is stopping me booking an appointment with Abbey direct and just take out an offer with them with no middle men to worry about? i mean i dont mind going throught a broker if you or anyone can recomend one who can get me a better than high street offeres? but if is something i can do myself what is the point?

DJ_Mike

Mortgage brokers are useful in that they'll do much of the chasing and paperwork that you'd otherwise have to do. Best thing is to chat to 2 or 3 in your local area and find out what their fees are like before signing on - sometimes the face-to-face contact lets you negotiate stuff like this where online sites make it so much less personal.

Let_Us_See

Where is a broker mentioned?

Myk3 went online to a comparison site - no mention anywhere of broker involvement?

Still, who cares about accuracy, when it gives an opportunity for another couple of rants!

DJ_Mike

Let_Us_See wrote: »

Were is a broker mentioned?

myk3 wrote: »

I got an informative call back from them then requested i fill in a mortgage promis form.

I believe you'll find that was the part where one of their brokers took over from the simple "price comparison" site phase! Advice/guide/broker/informant - doesn't really matter what they call it. Still the same old thing!

I'm sure you think I have a beef with all mortgage brokers - I don't. I just loathe people who aren't transparent with the moneys they're receiving for their services - £300 would be quite fair if not for the almost hidden bonus of £700 on top. (Thank goodness the mortgage paperwork has to be rather more candid!)

Guess it's down to how much you think a piece of advice is worth.

Let_Us_See

Transparency is very important and any broker charges will be provided in the Initial Disclosure Document (normally provided at first broker/client meeting or discussion) and Key Features Illustration provided before mortgage is applied for.

How much more transparancy do you want?

DJ_Mike

Let_Us_See wrote: »

Transparency is very important and any broker charges will be provided in the Initial Disclosure Document (normally provided at first broker/client meeting or discussion) and Key Features Illustration provided before mortgage is applied for.

How much more transparancy do you want?

Did you actually read anything I wrote or are you just ignoring the fact that I was referring to commission and not their fees!

Trust me, my broker was upfront enough about his fee (which he repeatedly mentioned I'd have to pay if I didn't take out one of his extortionate Critical Illness policies) - what he completely failed to mention was the substantial amount of money coming in from the commission on the mortgage, which I only saw after I'd scuffled with him over his fees and received my paperwork from Abbey.

I'm sure the FSA requires a broker to be totally honest about the fees they will personally charge, but there obviously isn't any requirement for them to disclose what (if any) bonus they're getting from the lender for you choosing that particular mortgage!

myk3

let us see, why the arrogant arguments? I was asking for advice and mike gave it to me. I didn’t fully inform that i was called back by a broker after my details had been submitted. my bad, now lets all get on.

DJ_Mike

I will provide one last point and play devil's advocate for a moment, rebuking my own argument - there is talk that mortgage lenders will eventually be made to scrap commission given to brokers, as this is seen as being a potential source of unfair bias. Brokers may advise clients to go for a particular mortgage because they'll get a bigger bonus - obviously that would be against the FSA's rules, but it could still happen. No commission would make the playing field completely fair. Unfortunately that does mean the consumer really would have to foot the bill - after all, brokers have to make money somewhere!

Anyway, I agree with you myk3, there's no need for arguments. You have my advice so I'll let it rest there. Good luck with your mortgage search and let us know how you get on! :beer:

Let_Us_See

What argument? I am talking about transparency and I certainly have no objection whatsoever to your self proclaimed rants. The original post concerned a "fee" and I have merely been pointing out that any broker fee will be declared upfront on the IDD. Which should always the first document provided to a potential client.

The Key Facts Illustration will contain re-confirmation of any broker fee, plus details of the lender's procuration fee paid to the adviser.

How is that not transparent? Whether or not you choose to pay them is another matter.