Help please - how to select an IFA to process the mortgage

bulktrans

Hello people,

I am a FTB (Scotland) and have contacted 2 IFA's to get the mortgage sorted out - 1st one is through the property agent (with whom we are buying the house) - his fee is £500 but will deduct any commission he gets from this and will come to our house to process everything the 2nd one is via our solicitor and he tries to make £700 per case and will deduct any commission he gets and the 3rd one is local to us and charges a fee of £295 and gets the rest from the commissions..

not sure who is the best tempted to go with the 1st one as his fee might drop from 500 to 200 (typically for a £90000 mortgage he will get 300) but then i think the 3rd one has a fixed fee...

any help will be appreciated.. are these fee etc normal../

bulktrans

_Andy_

Plenty of brokers will do it fee-free.
Do you feel you definetely need the services of a broker though?

bulktrans

yes i think we will need a mortgage broker as we cant rely on our bank for the best rates... how should be go about finding a fee-free mortgage broker..?

thnx

dunstonh

st one is through the property agent (with whom we are buying the house) - his fee is £500 but will deduct any commission he gets from this and will come to our house to process everything

That is unusual. I dont think I have seen an IFA working in an estate agent for years. What an awful waste of money as they cannot be using the IFA authorisations to the full. However, the fact he is fee basis and rebating commission on commission deals is very pleasing to see. There should be no potential bias here and it should be true whole of market.

the 2nd one is via our solicitor and he tries to make £700 per case and will deduct any commission he gets

More common to see an IFA linked to a solicitor as Solicitors are not meant to refer to any other type of adviser. However, again, best charging method and rebating commission ensures no bias and true whole of market.

nd the 3rd one is local to us and charges a fee of £295 and gets the rest from the commissions..

Whilst this may appear the cheapest of the three it will almost certainly mean that commission only deals will be considered. If the best mortgage deal pays no commission then only adviser 1 and 2 will recommend it unless adviser 3 has confirmed he will include no commission deals as well.

Personally, I would aim to use a mortgage adviser rather than an IFA. I would also aim to go on fee basis with commission rebate/offset as that makes it fully independent.

bulktrans

i also spke to another one and he is saying that he will charge a £250 fee if by checking the market we get only direct deal or will not charge a fee if he finds us a commission based deal....now not sure what to do ..

matttr6

We saw 2 independent advisors and were told it depends on your deposit. When we told them we only had 10%, they both said we were better off going direct to the bank.

Ended up going with Natwest who, so far have been great.

Conrad

bulktrans wrote: »

i also spke to another one and he is saying that he will charge a £250 fee if by checking the market we get only direct deal or will not charge a fee if he finds us a commission based deal....now not sure what to do ..

Well after tax and expenses (insurances and many other expenses) the broker will make a very small some for work spread over months on a loan this size. REMEMBER HE MAY GET NOTHING IF YOU / THE SELLER / THE LENDER PULLS OUT.

No decent business person could possibly commit to such a body of work for such a small sum.

Either he's desperate or he plans to sell you insurance. From experience it's usually the latter.

A decent broker will usualy want about £300 plus commission. Trust me many mortgages are very difficult to get through and result in multiple applications and huge amounts of work ironing out problems.

If cost is your king, then go for the cheapest route, but dont expect much when things go wrong.

Before someone claim an after tax sum of say £200 is enough for a lot of work spread over months (for which the broker may get sued dont forget - there are many pitfalls), then in that case you yourself would say decorate my house for a fornight for this sum, yes? BUT I MIGHT NOT PAY YOU (as is the nature of broking / house buying)

bulktrans

thnx all.. i think i will go with my local independent mortgage specialists .. they charge a fee of 295 and also get whatever commission from the lender. we had an initial meeting with them and the advisor was nice and discussed the deals availbale in the market etc .. we also made it clear that we would like to shop around for the insurance etc.....

dunstonh

bulktrans wrote: »

thnx all.. i think i will go with my local independent mortgage specialists .. they charge a fee of 295 and also get whatever commission from the lender. we had an initial meeting with them and the advisor was nice and discussed the deals availbale in the market etc .. we also made it clear that we would like to shop around for the insurance etc.....

Thats fine as along as they are considering all mortgage deals (ie independent) and not just commission only deals (Whole of market).

You probably would have found that the other IFAs on fee basis would be cheaper for insurances then you shopping around. Most IFAs, especially networked IFAs, are cheaper for insurance than you can buy on the net when working on fee basis rather than commission.