Using multiple brokers to obtain the best mortgage

AndrewSmith

jamesd wrote:

This could perhaps be better expressed given the presence in the market of brokers who will refund some of the commission to the client, creating a cost difference for the client.

The majority of brokers who offer a 'cashback' incentive to the client or refund of part of the commission do so in usually 2 scenarios:

1) They are charging a fee to the client thus refund some or all of the commission.

2) They are acting on a 'non advice' basis merely submitting the application for the client and offering no advice and subsequently no follow up service or indemnity.

Does this software include the products not available through brokers, or available but with no commission?

It includes all products available to brokers commission paid or not. The products from the likes of HSBC or Direct Line etc are researched independantly in addition to using the software.

How do you and the other brokers handle the case where one of those deals is in the best interests of the client, since it still remains fair to compensate you for your advice service?

The actual sourcing and research is a very small part of the role of a broker. Myself personally ask for no remuneration from the client should I not be able to match or even better the product offered by a lender who does not accept business from Brokers. It is after all no fault of the client if this is the case so I believe the client should not have to pay for that particular shortcoming.

Such lenders tend to appeal to specific niche markets such as HSBC with graduates etc so it is actually very rare that the broker finds him/her self in this situation. I cannot speak for the other brokers but I levy no charge in these cases.

It is such instances that, as I referred to in an earlier post, must be factored into one's overall business plan.

Joe_Bloggs

If you don't know what a dip is then I will tell you anyway. It is a decision in principle for a mortgage. I learned this today. The reason that this has a lasting effect on a consumers record is down to the illogical system that the credit reference agencies operate. They know everything about soft footprints. Why are they not widely used and why is it not an industry standard ?
J_B.

AndrewSmith

Joe_Bloggs wrote:

If you don't know what a dip is then I will tell you anyway. It is a decision in principle for a mortgage. I learned this today. The reason that this has a lasting effect on a consumers record is down to the illogical system that the credit reference agencies operate. They know everything about soft footprints. Why are they not widely used and why is it not an industry standard ?
J_B.

Couldnt agree more

kenshaz

homer_j wrote:

Sorry for the short response above, I meant to add further but the phone went..

I saw a couple today who had been to 2 brokers prior to seeing me earlier this week and had been told that they are unmortgageable as they had been dip'd several times in a short space of time.

Questions to be asked here:

Why were they dip'd so many times?
Why were they not told to obtain their credit record before trying to apply elsewhere?

Answers:

Because they had shopped around with several brokers including local and telephone based ones.

They had but ignored the fact it was the local broker before coming to me that had told them so about 5 dips in as many days had been carried out.

This to me tells me that there is a HUGE risk in shopping around if a) you do not fully understand what you are doing and b) you get caught up with sales people rather than advisors.

It has taken me almost 3 days to sort this out with regards to speaking with people to do this and I have sorted something out but believe me it was hard work.

Yesterday I gave a person a quick idea of what we could do for them as they were honest enough to say that they had someone else looking at it for them. I was honest to why I wouldnt DIP and guess what - I got the business because I had fully explained things.

My gripe with using multiple brokers is not the fact that I am losing business because I know that I gain just as many as I lose but the fact that people do it without understanding the full consequences.

Perhaps the following statement will explain how not shopping around should carry a warning This action could seriously damage your wealth.


Brokers make their money in two ways. They get a 'procuration fees' from lenders when you take out a mortgage;these average from 0,25% of the mortgage value for standard mortgages to 1% for those with credit problems.So on an £ 80,000 mortgage this is not insubstantial £200 to £800

Most also charge customers a fee on top 0.5% of the mortgage value is common,but increases with complexity..The most you ever pay is 1%,but some disreputable brokers target those with poor credit histories and charge up to a scandalous 10%-and the advice isn't good. Use a mainstream broker.

AndrewSmith

kenshaz wrote:

Perhaps the following statement will explain how not shopping around should carry a warning This action could seriously damage your wealth.


Brokers make their money in two ways. They get a 'procuration fees' from lenders when you take out a mortgage;these average from 0,25% of the mortgage value for standard mortgages to 1% for those with credit problems.So on an £ 80,000 mortgage this is not insubstantial £200 to £800.

The procuration fee is set by the lender and is only paid to the broker approximately 4 weeks after legal completion. It is not paid for by the client in any way as it is cheaper and more cost effective for the lender to take business from brokers.

Most also charge customers a fee on top 0.5% of the mortgage value is common,but increases with complexity..The most you ever pay is 1%,but some disreputable brokers target those with poor credit histories and charge up to a scandalous 10%-and the advice isn't good. Use a mainstream broker.

It is inaccurate to state that 'most also' charge a fee. This is in fact not the case at all.

The majority of brokers operate on a commission only basis but offer the client the option of charging a fee and returning the commission to the client. To call themselves Independant the FSA state that they must offer this option. There are not many brokers in the grand scheme of things who charge a fee and keep the commission.

You are however quite correct about the unscrupulous firms who advertise their wares on daytime TV offering remortgages and Right to Buy mortgages with fees of anything up to 5%. These type of brokers have very limited market access and have no more expertise than any other broker. They should be avoided at all costs.

kenshaz

I will respond to this post,because of your last paragraph and because I agree with your post.But I will ask you one question,would you just walk off the street into a broker's and instruct them? or would you make inquiries at several?
Some people in society are vulnerable,they need to be made aware ,your comments about the TV ads proves that ,a high percentage must get sucked in,I trust no -one ,solicitors ,estate agents ,until I have in writing their contract and fees

AndrewSmith

kenshaz wrote:

I will respond to this post,because of your last paragraph and because I agree with your post.But I will ask you one question,would you just walk off the street into a broker's and instruct them? or would you make inquiries at several?
Some people in society are vulnerable,they need to be made aware ,your comments about the TV ads proves that ,a high percentage must get sucked in,I trust no -one ,solicitors ,estate agents ,until I have in writing their contract and fees

I have maintained that I have no problem if people want to contact more than one broker. That is the perogative of the client after all. It causes me no problems and from a personal point of view I very rarely lose business to a competitor. I have confidence in my training, expertise and knowledge of almost 13 years industry experience at all levels of Financial Services. Clients must be comfortable with my blunt, straight forward, plain english approach to the subject as I have not yet had a complaint.

I simply ask whether a client has / is approaching other brokers for subsequent advice. That way everyone knows where they stand.

At the beginning of each mortgage interview I simply say something along the lines of this:

" Let's spend 30 minutes or so going over how I work, how I may be able to help you and your expectations of me. At the end of the day Mr Client if you like the way I work, we will do business, if you don't we won't. I won't be offended if you say no. All that I ask is that you tell me either way. Similarly if what you are looking to do is not possible I will tell you straight away so as not to waste your time or mine. That way we both know where we stand."

At the end of the day the client will decide who they use and what they do. If I do not figure as part of that plan then so be it. The matter is out of my hands once I have made my presentation. I do not waste time worrying about things over which I have no influence. What's done is done and cannot be chaged.

Win some lose some.

MortgageMamma

MortgageMamma wrote:

But only last week you were telling forum users to take advice from numerous brokers and then complete the case through L & C?

Why would you suggest that people use L & C to complete once a suitable product has been recommended by another broker/accepted by the client and then do the exact opposite yourself?

Surely if brokers are being played off against eachother, then the broker who presents the most suitable mortgage product should be the one who benefits from the business?

kenshaz wrote:

Only because I know that L&C have no fee ,I still believe that you should compare quotes ,and complete through a broker with no fee .I would never just go to one person ,no matter what I was about to purchase ,be it gas or electricity,a car or a washing machine

But you had taken this from ML's moneydiet, which says to instruct a number of fee's free brokers, then take the advice and complete the L & C, so how can you justify the fact you would only complete through L & C because they are fee's free, when in fact you know that ALL the brokers you would instruct using this tactic are fee's free?


Originally Posted by tomstickland
How about using schizophrenic brokers? One broker with multiple mortgage personalities? Much more efficient.

kenshaz wrote:

Tom that was an excellent observation,very perceptive

and whats this supposed to mean? who are you attacking now with that statement? It adds no value to the thread and simply lowers the tone to mud slinging.

payless

The majority of brokers who offer a 'cashback' incentive to the client or refund of part of the commission do so in usually 2 scenarios:

1) They are charging a fee to the client thus refund some or all of the commission.

2) They are acting on a 'non advice' basis merely submitting the application for the client and offering no advice and subsequently no follow up service or indemnity.

I think James does raise a point
---

Personally I like to look at each case on an individual basis , and consider the level of work , how complex, time spent & costs ( such as travelling) for each case. Any rebate is based accordingly. I think that this is effectively moving close to a fee based ( with full comm refund) model ( and not a silly fee based on % rather a flat rate basis) , without actually having to charge ( and then be classed as a fee based broker- as articles such as Martin's don't really make it clear that fee based can actually be a good thing for a client !)

I do this as we all know that on average its not 3 times as hard to process a £300K case as a £100 case, so why should I be paid 3x as much.

I nearly all cases my business is processed on a full advice basis - some do not warrant a rebate , some perhaps I ought to charge a topup fee ( or although I don't- especially as its usually returning clients with smaller mortgages ), others might get a rebate ... and in some cases this can be a lot more than certian other routes that don't give advice.

This model is used across my client base , although if a new enquiry starts with - how much would you rebate , then feel that the client is using me on a "price point" rather than for my services , and that's not really how I like to do business. Likewise I would refuse a case or charge an upfront fee is I think I was being abused

If my overheads were to rise any more, I would expect to raise the level, whereby less rebates were offered and more cases actually needed a topup fee.

kenshaz

AndrewSmith wrote:

I have maintained that I have no problem if people want to contact more than one broker. That is the perogative of the client after all. It causes me no problems and from a personal point of view I very rarely lose business to a competitor. I have confidence in my training, expertise and knowledge of almost 13 years industry experience at all levels of Financial Services. Clients must be comfortable with my blunt, straight forward, plain english approach to the subject as I have not yet had a complaint.

I simply ask whether a client has / is approaching other brokers for subsequent advice. That way everyone knows where they stand.

At the beginning of each mortgage interview I simply say something along the lines of this:

" Let's spend 30 minutes or so going over how I work, how I may be able to help you and your expectations of me. At the end of the day Mr Client if you like the way I work, we will do business, if you don't we won't. I won't be offended if you say no. All that I ask is that you tell me either way. Similarly if what you are looking to do is not possible I will tell you straight away so as not to waste your time or mine. That way we both know where we stand."

At the end of the day the client will decide who they use and what they do. If I do not figure as part of that plan then so be it. The matter is out of my hands once I have made my presentation. I do not waste time worrying about things over which I have no influence. What's done is done and cannot be chaged.

Win some lose some.

We appear to agree,if the above procedure is your method of working,and you have no problem with people contacting other brokers and all
is in the open,why has it taken so long to reach this point.No fee is charged unless the person wishes.I am sure that you can do no more.