Going direct after broker quote

purpleapp

We are in quite unusual circumstances so most lenders won't touch us (we are solvent with great credit rating, just unusual).
SO I've been trying to find a mortgage direct and also with the help of a broker (which one bank directed me to as they couldn't help). After a long conversation he said he would search the market and did tell me he does charge a fee but dodged around telling tell me how much. I should probably have pressed him on this but as I wasn't agreeing to anything and the fee was only on completion of the mortgage I thought there was no harm. He has found a well known company who will offer me a deal but only told his fees after the long conversation about our options.
They are extortionate 2,000 quid!! It's quite a small mortgage and less than 50% LTV

My questions: Is there anything to stop me approaching the bank directly and set up the mortgage by myself? I think they usually will deal directly, but will they refuse now they already have my details from a broker?
If I had known his charges upfront I wouldn't have asked him to carry on. However this is the only deal I or any broker has been able to find for me.
Thanks in advance for your help.

GMS

You should have been presented with an Initial Disclosure Document upfront detailing the fees charged.

You have said the case is not straight forward so there will I assume be extra work involved in which case a fee is justified.

If you are not comfortable then tell the broker. Negotiate the fee or walk away.

I like many other brokers have cases where, partly down to the advice of this site it is seen as ok to use the expertise of a broker and then apply direct. Whilst it is very frustrating it has unfortunately become seen as the thing to do.

In this case if you were not given the correct documentation then you have more than a valid reason.

Was the complexity of your case disclosed at the outset or did this become apparent afterwards?

FattyBettyBoo

I am sorting out a new deal at the moment with my existing mortgage provider. I used London & Country advisors who are free and got one set of rates, then phoned my provider directly. L&C told me that the rates they offer through brokers are usually different to their own direct rates, and so I should check both. It turned out that fixed rate was cheaper than trackers with the broker and vice versa for going directly. Took a deal yesterday directly with the Halifax with the broker's blessing.

If the broker told you that the fee is payable on taking the mortgage offer I would go to the company directly, then to a free advisor/broker such as London & Country and see how the rates compare.

kingstreet

At the initial point of contact with the broker, you should have been provided with an Initial Disclosure Document which clearly sets out the nature of the broker's service, remuneration and complaints and compensation facilities.

In terms of remuneration, you should have been shown the options available to you, such as fee, or commission, or a deal where you pay a fee and any commission is rebated to you.

Were you given such a document? Is the broker whole market or independent?

You don't state clearly the amount of money involved to justify this £2,000 fee, but I would point out that as a broker with a 1% fee, maximum £495, I would not view it as realistic with my clients.

What do you feel would be reasonable for the job? Are you simply acting on the broker's advice, or are you expecting a full advisory and arrangement service? Perhaps you should consider telling the broker what you think would be reasonable and making him an offer on that basis?

Hadn't read GMS reply when posting this! Doh!

purpleapp

All my dealings with this fella have been over the phone. He did read out his official legal stuff quite near the beginning but that dealt mainly with what they would do with my information and did say they would charge a fee but did not give any indication as to how much - I would have noted that down.
He was given the case purely because it was unusual and the very first thing I did was explain our circumstances. We have had two phone calls totalling about 45 minutes altogether. His system said there were just two companies that would deal with our situation so he only contacted two (I already know that most others won't be interested).

A 1% fee would be less than your maximum of £495 kingstreet so it is not a huge mortgage at all.

I did expect a fee, but was thinking more of a few hundred rather that thousands. I did not wish to pull a fast one on him, but feel he is possibly using the fact we are struggling to find anyone to take us on to wring all he can.

As a side note, after speaking yesterday I still haven't received the emails he said he would send.

FattBettyBoo - I already tried L+C and other usual suspects but they all failed to find us anyone who would take us on.

Thanks for the responses
PA

GMS

Even if the interview was over the phone an IDD should still have been sent. I send out by the next working day or by email for my telephone clients.

If you are not happy with the fee and/or service then you need to address it either by agreement with the current broker ar move to a new one.

magpiecottage

GMS wrote: »

You should have been presented with an Initial Disclosure Document upfront detailing the fees charged.


In this case if you were not given the correct documentation then you have more than a valid reason.

The initial contact was by telephone so the broker could not have "presented" the initial documentation.

MCOB 4.4.7R says that it need not be sent if the firm concludes that the initial contact is by telephone and it concluded that the consumer was not eligible for any product it could offer.

Given that we do not know the timescales involved, I do not think we are in a position to fairly comment on whether the broker has failed in this regard. Certainly if they phoned in the morning and he called back in the afternoon I would not consider it a failure.

It is also not clear to me that there is not a fee from the lender included in the £2K and there seems to be no certainty that the OP could actually obtain the loan by going direct.

GMS

OP states broker found a well known company who would offer the deal having searched the market. For this to have been done I would assume a fact find was carried out.

To have decided a 2k fee and found a suitable lender then an IDD should have been done.

hcb42

magpiecottage wrote: »

The initial contact was by telephone so the broker could not have "presented" the initial documentation.

MCOB 4.4.7R says that it need not be sent if the firm concludes that the initial contact is by telephone and it concluded that the consumer was not eligible for any product it could offer.

Surely it should have been posted then??!

Conrad

purpleapp wrote: »

I did expect a fee, but was thinking more of a few hundred rather that thousands. I did not wish to pull a fast one on him, but feel he is possibly using the fact we are struggling to find anyone to take us on to wring all he can.

As a side note, after speaking yesterday I still haven't received the emails he said he would send.

PA

I specialise in complex cases, but that does seem a high fee. You should bare in mind if you go direct to lender, there will be all sorts of questions that could well trip you up.
For example an innocent request for a Bank statement that might not properly reflect your actual earnings position.

purpleapp

Not all that interested in the broker protocol. But can anyone tell me what the bank's likely response will be if I call them up?
I know they have already approved us, the broker has told me as much. I am confident I will have all the documentation they could ask for. I'm just concerned that the bank will turn around and say we already have your details from this broker, you need to go through them and not come to us directly.

The set up fee from the bank is £1,500, the broker fee is 2k on top of that. Not to mention application fee, solicitors, valuation etc.

First call was on day one - he took details and said he would speak to the banks, on day three he called back with their response.

He has now sent all the details. The fee states 'can be up to £2,000' so they are charging me maximum. They also get commission fro the lender.

Surely charging like this is what gives brokers a bad name?