Hidden Mortgage Costs

Chris1975z

Dear All

I'm new to this site but pretty desperate for some advice! My fiance and I visited a broker from 6pm until 8pm last Thursday. I came out of an IVA a couple of years ago and we've seen a few brokers where the AIP's have failed in recent weeks. I also shot an email off to a firm in Maidstone and the AIP was accepted through Abbey. They then arranged the meeting mentioned above.

During this meeting we were asked to sign a document and the advisor explained that this was the only way he would be able to either email us or accept phone calls from us. Essentially, we needed to sign the form or nothing could go further. We took along copy payslips etc and other statutory documentation.

When we got home I also reviewed the T&C's of the mortgage proposal form and noted it stated the broker would receive £440 in commission if the application were successful which I assumed was their remuneration for providing this service (none of the other brokers have placed any up-front charges to us so I expected this to be industry standard).

However, I picked the pack up again yesterday and found a copy of said mortgage brokers T&C's stating an upfront fee of £249 would be payable along with a further charge of up to 1.5% of the mortgage amount (£110K with a depost of 80K for a purchase price of 190K). However, they state this fee will be waived if the application is successful and we take out their life insurance (they are regulated through legal and general). It also states that if the mortgage application fails this is also payable.

Am I reading this correctly? They can charge us £249 + £1650 for a 2 hours consultation. Needless to say I feel completely mugged at the moment. At no point did the advisor mention any charges whatsoever and the form we signed was only signed on the basis that he would not be able to discuss the matter with us as mentioned above. We also weren't provided with a copy of the signed document.

Can someone please advise whether some mortgage broker code has been broken above and the best way for us to move forward?

Thanks for all your help in advance.

Kind Regards

Chris

dunstonh

Am I reading this correctly? They can charge us £249 + £1650 for a 2 hours consultation.

Yes they can. True that the amount they are charging is way over the top and its on top of commission as well. The amount isnt reflected in the work (which is more than 2 hours but that's irrelevant).

Can someone please advise whether some mortgage broker code has been broken above and the best way for us to move forward?

The way its been done appears to have been wrong. Although, the fact you havent been charged £249 yet suggests that you havent activated the process yet. You have to be given the opportunity to say no and walk away without incurring charges. Although I suspect the sales rep will huff and puff to intimidate you into paying.

Legal & General sales reps are well known for doing this. You should put an immediate complaint into L&G telling them what happened.

Why did you see a sales rep? You should have seen an independent or whole of market adviser (in all areas).

Chris1975z

We went to see the rep as they were the only ones who had successfully managed to get an agreement in principle for us. Every other broker had failed at this first stage and I assumed that this broker was much the same as every other mortgage broker having never been charged for any work that any other broker had undertaken?

I'm assuming that if the application is successful and we take out their life cover then this matter is put to bed as long as we keep the life cover in place for "x" number of years. Again, the paperwork makes reference to a "fee waiver agreement" but this has never been received either?

dunstonh

I assumed that this broker was much the same as every other mortgage broker having never been charged for any work that any other broker had undertaken?

That assumption was wrong. There are different types of adviser for mortgages and other types of financial services (whole of market, independent, tied etc). They will also have different business models and charging methods. L&G are well known for being highly expensive and of course tied to L&G for insurance products (at a higher cost too than the Independent pricing).

I'm assuming that if the application is successful and we take out their life cover then this matter is put to bed as long as we keep the life cover in place for "x" number of years.

Yes. However, you will be paying over the odds for the mortgage and the life assurance.

What this L&G sales rep has done is the sort of behaviour that is trying to be eliminated. You should not allow it. The sales rep doesnt have some magic ability to get you the mortgage. If they can get Abbey to agree the mortgage then any broker can. Providing of course, the AIP (and application) is honest. Is it possible that other brokers getting declines were doing so because they were honest where as this L&G one got it agreed because he told a few lies?

Chris1975z

I truly hope not! I've seen a copy of the AIP which was based on my previous address, full name etc. The trouble is, we've now put in an offer on a property and this application is in the process of getting filed. We've had such a hard time getting up and running on these mortgages that I don't want to pull out at this stage and risk not getting the mortgage successfully processed. I appreciate this seems like some twisted logic but when you've spent as much time with continued disappointment as we have then it's really hard to imagine pulling out at this late stage.

My take is as follows.

A) If the mortgage is successful then we end up paying at slightly over the odds on the life insurance. The mortgage rate itself is as advertised by Abbey so I'm not overly concerned about that.

If the mortgage is declined and they attempt the 1.5% charge on an unsuccessful mortgage then I will raise heaven and earth - local press and name and shame the business, Legal and General Complaints, FSA etc.
If they just want to charge the £249 then I will just have to take it on the chin as a learning less and move on from this.

I appreciate the above may seem an odd way of approaching this matter but our hands are genuinely tied at this moment on time being so far down the line with an offer accepted on a property. That's the way we see it which is desperate but true!

dunstonh

I would be concerned that other mortgage brokers have had refusals yet this one that has lied to you says they can get it. They all have access to Abbey. From what I understand, Abbey's lending criteria is much the same as the others. So, what is it that this one has done to get it accepted that the others couldnt?

I understand you want to give it a go. However, I would be on guard big time and check everything carefully. Dont just sign things. Read them and make sure its accurate.

Chris1975z

Thanks Duns

When I've spoken to other brokers they have not gone down the Abbey route. The abbey route might be successful as I have all my savings and current account with them which no other broker had tried?

I appreciate your comments though and think we'll be having a row with the broker if it doesn't succeed!!

Jonesy_McJones

Chris - I've just sent you a message - it may or may not help but thought I'd try.

Chris1975z

All

An update on the above. Mortgage agreed and moved into the house a month ago. Funny thing is I received a letter from my solicitors yesterday who advised me that I owed a further £249 broker fee which he had ommitted from the completion statement and therefore wanted payment of such. I advised that I had not agreed to £249 and had certainly not signed any agreement. Oddly enough the solicitor and the broker are drinking buddies - I thought it most unusual for a solicitor to be chasing the broker fee anyway? I have emailed the solicitor and advised him that I will make a complaint to the Law Society if he continues to persue this claim (why is he acting as an agent for the broker I wonder?). We had a cash back of £250 on the mortgage which we chased the mortgage company for after 4 weeks from moving in. Guess what...it was paid to the solicitor when the mortgage funds were transferred and they never informed us of this! Then when we did approach the solicitor they deducted a further £14 for further legal searches which they forgot...! I have numerous email trails and hard copy correspondence continually requesting the mortgage broker detail any fees due to him other than the commission paid by the mortgage company. Never got any answer so I assumed nothing (all hard copies still available etc as I could see this one coming back to bite me at some point based on intial threads).

Anyone got any thoughts/advice on the above? Thanks for all your help in advance.

Running_On_Empty

"If they just want to charge the £249 then I will just have to take it on the chin as a learning less and move on from this." 17 May 2010

Hmmm.

Chris1975z

But nothing was signed...