Broker trying to claim double fee

twisterrosie

I am due to complete on my purchase next week and received the completion statement from my solicitor yesterday, it details an amount on there "Brokers fee - £xxx". I pointed out to my solicitor that the brokers fee is clearly included on the mortgage offer and is being added to my mortgage. I contacted the broker and he is claiming that this is correct and I do need to give his fee to the solicitor and yes he is also paid by the lender. He was incredibly condescening implying that I did not understand the difference between a) the arrangment fee b) the procurement fee and c) the broker fee. I DO understand! I pay the broker fee as agreed (this has been added to the mortgage), I pay the arrangement fee as agreed (this has been added to the mortgage), the lender pays the broker the procurement fee - yes? I clarified the position with the lender (even though the broker told me not too contact them) and they were really helpful, they advised I should pay the broker nothing, they pay his fee (as detailed in the offer).

I have advised the broker of this and he is still maintaining that I need to pay his fee through my solciitor which would efectively mean he got his broker fee twice AND the procurement fee from the lender - this cannot be right!!

Any advice appreciated.

dunstonh

they were really helpful, they advised I should pay the broker nothing, they pay his fee (as detailed in the offer).

I havent done mortgages for very many years but last I knew, they do not pay the fee.

The lender will pay any commission that is payable but they will not pay any fee that is agreed.

I have advised the broker of this and he is still maintaining that I need to pay his fee through my solciitor which would efectively mean he got his broker fee twice AND the procurement fee from the lender - this cannot be right!!

If the agreement is for fee plus commission then the broker is correct. If its fee only, then the commission should be offset against the fee and any difference rebated to you or you pay the difference if its the other way round.

Are you perhaps mixing up commission (that the lender pays) and fees (that you pay)?

Mips

You pay him a fee for him doing all the hard work for you.

The lender pays him commission on the sale.

Simples.



ETA: The arrangement fee would be added onto the mortgage but that's not the broker charging you, that's the lender. Are you sure you aren't getting confused here?

Matt1982

Did you sign any fee agreement form with the broker.

Leon_W

I think you will find this is a simple misunderstanding.

Let us also ignore the procuration (commission) the lender is paying the broker as this transaction is a completely separate arrangement and not relevant to your concern.

The issue you have is with the broker fee which appears on the completion statement. This fee HAS to appear on the completion statement as the solicitor, quite rightly has to account for every penny.

The misunderstanding is this. For arguments sake let's say the brokers fee was £300. This will be listed on the completion statement along with all the other fees that have to come out of the "POT". The pot being the amount released by the mortgage lender to the solicitor PLUS the balance you will need to provide to cover the deposit and fees etc. The broker fee may well have been added to the mortgage amount so in effect all you have done is borrow £300 more in order to pay it, so the overall net position is one where that little bit extra you have borrowed gets paid to the broker on completion. He does not get paid twice.

That probably isn't very clear but if anyone who knows what I'm on about can explain it more clearly then be my guest !

Regards

Rick62

So if I understand correctly you have agreed to pay the broker a fee in addition to the commission he receives from the lender?

The lender is paying the broker fee, adding it to the mortgage, and this is correctly shown on the mortgage offer.

The same fee is also showing on the lawyers final statement. This could be correct, depending upon how the lawyer has itemised it. The lawyer might have shown the total gross loan advance, then shown the deductions, arrangement fee, broker fee, bank fee, to arrive at the net amount of cash actually received from the lender.

Matt1982

Leon has explained this well.