Mortgage Quote from Financial Advisor

dottij

My husband and I are currently outside our fixed rate period for a mortgage on our main residence. I contacted a financial adviser who is charging us £600 in total for his services.

He has found us a great deal on a new mortgage but I am concerned about his fees - Is this what you would expect to pay a financial adviser? This seems a bit costly from my point of view but I have nothing to base it on.

In the past the financial advisers we dealt with were paid by the mortgage provider directly.

dunstonh

I contacted a financial adviser who is charging us £600 in total for his services.

One assumes that with a fee that high that any commission is being rebated? That is the sort of fee level you expect for fee based independents (with commission rebated).

In the past the financial advisers we dealt with were paid by the mortgage provider directly.

And only offered those that paid commission.

Fee basis with commission rebate is a very good option - this is known as independent.
Fee basis with commission kept is not very good (unless fee is very small - typically used in low value areas with small mortgages) - this can be whole of market but not called independent.

betmunch

I think I heard that 71% of brokers now charge fees.

I have a friend who charges £995 per mortgage. The advisor in our office charges £149. The guy who posted above doesnt charge a fee at all.

The real question is do you think he did enough work/will do enough work to justify charging you £600?

Its your money, you decide how to be parted with it!

dottij

Pali-Mortgages wrote: »

Hi Dottij,

An advisor can charge whatever they like. They will almost certainly be receiving money from the lender also. If you have a look at the KFI (key facts illustration) and the IDD that the advisor has (should) given you it will explain the fees that are to be paid.

I personally don’t charge a fee. This is something that we may change in the future. If you look around you may find a cheaper advisor. For that fee though I hope he is whole of market??

I've taken a look at the key facts illustration and the broker is also receiving £507 from the lender. He has also quoted for a mortgage payment protector but the fees have not been listed on the illustration. What's your opinion of this?

Thanks for your help.

dunstonh

I work on a commission only basis but I can honestly say that all lenders pay roughly the same now at about 0.5%

I have been moving my mortgage adviser slowly to fee only basis. He still does commission as some people cant get their head around paying for something that they perceive as being supplied free before. However, offering fee only with commission rebated and including non commission paying deals and direct deals in the process usually works out more cost effective when priced over the term of the deal.

It can be very hard for mortgage advisers who have never charged a fee to move from commission to fee basis. It is scary move (I remember doing it on the IFA side). However, you usually find that once done its not as hard as you think. It also brings a lot of goodwill as the person knows you are really whole of market and you are not letting commission decide your choice (although the rebate of the commission can actually influence the decision as that rebate is costed into the calculation on who is best).

I've taken a look at the key facts illustration and the broker is also receiving £507 from the lender. He has also quoted for a mortgage payment protector but the fees have not been listed on the illustration. What's your opinion of this?

Tell him to take a hike as that is taking the P. £600 and commission rebated is fine. Or no fee and keep the commission but both is greedy (unless that caveat is that the commission is too low so a fee is needed to bring it up - although if you are doing that you may as well go fee basis proper)

dottij

Thanks, dunstonh.

I used your advice to put together an email with questions for my broker. I am now awaiting his response.

£150 of his fee is payable on application and £450 on completion. Depending on his responses to my questions I am concerned that he will insist on this portion of the fee despite the fact that my husband and I have not physically signed anything.

GMS

Personally I would not pay, nor do I charge a fee on application. All fees on completion.

bigviv

my financial guy is good in that he represents the whole market (except hsbc i think) and charges £200 upon completion. had several meetings with him

so who knows, seems to vary considerably...!

shopping_queen_2

Hi,

If anyone could offer advice I'd be grateful.

I'm a contractor and have contacted an IFA who specialises in this area. He's completed a report on my circumstances and submitted to various lenders, which resulted in me being offered an AIP by one. I've now submitted my application in full (he's compiled it based on info I supplied) and charged a fee of £495 at point of application.

He also advised that he may be paid a commission from the lender. I've just received a personalised quote, which only mentions the £495, however the mortgage I'd asked for was £200k and the quote is for £206k. There is an arrange fee of £999, however, can't figure out what extra £5k is - I'm going to call tomorrow and query, however, am concerned this could be in relation to commission. How much extra commission should I expect to pay?

I'm happy to pay the £495 as he found a mortgage when i thought no-one would lend and accept this is for this service so commission may be extra but how much is reasonable?

Thanks

Conrad

I charge between £199 and £3000 depending on the case. I also take commision if it happens to be available, but I have arranged several non commision deals recently (direct to lender deals).
Some advisers take on really complex, no hope cases whereas others I know only take the straight forward stuff, so comparing fees levels is not straight forward.

For a simple case I think a fee of £199 - £399 is about right.

There is an inherent risk with some clients that could well come back a bite the adviser later, despite the adviser having taken resonable steps. As an example the FSA state an adviser CAN rely on client verbnal disclosures without documentary evidence, although something nlike a Bank statement would be sensible to hold on file when it comes to income proof. Lets say the lender 'fast tracks' this applicant (fast track is where no income evidence is requested), and later that client gets into arrears. The adviser could be in for thousands in compensation with such a case.