Broker charges if mortgage offer has not been received...

Rizzy

I have a quick question if anybody can help me plz I'd be very thankful to you.

I applied for a mortgage about 4-6 weeks ago, was approved at the AIP stage, sent the documents they requested and waited for weeks on end with no correspondence until they asked for p60 and accountants letter which I sent, still did not receive a offer after 2weeks. Neway cut the long story - I asked for the mortgage to be cancelled as I got fed up waiting as I was told by broker my case is very simple and he does not see a problem in me getting approved quickly.

I want to try with anotherlender through a different broker as I've now come to realise this broker was not all he'd made himself out to be.
Problem is he is trying to get me to pay him £xxx which I believe was only payable if the mortgage was approved, am I right or due to me cancelling am I still liable to pay him.
I checked the AIP document and below is what it stated.......

A fee payable to broker x for arranging the mortgage (payable if you are offered a mortgage)

dunstonh

Problem is he is trying to get me to pay him £xxx which I believe was only payable if the mortgage was approved, am I right or due to me cancelling am I still liable to pay him.

The FSA allow mortgage adviser to charge for work done even if the mortgage is not agreed. Typically not the full amount.

The fee agreement must make it clear what you have to pay if the mortgage does or does not proceed. For example the mortgage key facts about our services may say

- A full refund if through no fault of your own, the mortgage is unable to complete

- a refund of £250 if you make the decision to withdraw from teh mortgage after the application has been submitted to the lender

- no refund, if the reason the mortgage does not complete is due to supply false or non-disclosure of information that is pertinent to the lenders decision not to proceed.

(those examples assume the fee was paid in advance - wording would be altered if you pay on completion but you get the idea).

The AIP document is not what you need to be looking at. Look at the "key facts about our mortgage services" document. It has a black "keyfacts" logo at the top of the first page and has numbered sections. Number 1 has the title The Financial Services authority and most of the other sections have tick boxes for the various options. One section will be called " what you will have to pay us for our services"

Rizzy

Thanks dunstonh , sorry it was the key facts document I was looking at. It does say that the fee is payable to broker x payable if u are offered a mortgage - non-refundable.

But does that mean as I applied and then canceled I'd need to pay it? I was not yet offered the mortgage, although I had applied. Looks like it's going to be an expensive mistake using this broker.

Need to keep my eyes open for next time.

dunstonh

If that is all it says then its not very good. The terms should be clear. In this case, they seem to favour you as you havent had an offer of mortgage yet.

Based on that alone, I wouldnt pay as it says if u are offered a mortgage . It hasnt got to that stage yet.

Rizzy

It gives me all the other charges for conveyancer survey completion but in regards to fees payable to broker that's all it states.
So I'm well within my right not to pay him - he's been pushing for a payment since AIP, I held it back. There's no other fees mentioned, should I still pay him something for the work he has done or do I not have to as there's nothing stated on the KFI.

Conrad

You said he's been pushing for payment since AIP stage. I'm guessing he probably has not progressed the mortgage further as you have not paid.I know for myself now I just won't take an application seriously until money changes hands - as anyone who runs any business knows, people no matter how serious they claim to be, can and do change thier minds on a whim, so for me, no money = no work.

Simply check the Intital Disclosure document he is supposed to issue you with at outset. It is confusing as it says 'key facts' at the top, but so does the mortgage illustration - this is why so many customers get confused. The 'key facts about our services' must clearly state the fee arrangment.

One thing further, you use a phrase I come accross all the time - 'my case is very simple'. I can tell you that from a brokers view, where they are liable in many ways, that often a case is far from simple.

dunstonh

It gives me all the other charges for conveyancer survey completion but in regards to fees payable to broker that's all it states.

Are you sure you are looking at the right document?

The "key facts about our services" wouldnt normally list charges for survey etc. They would appear on the key facts illustration for the mortgage.

Rizzy

I take your point Conrad about taking money before doing any work. It's a fair strategy but it has to be told to the applicant before going ahead with the application. When I spoke to him at the beginning he laid out all the costs etc but didn't mention anything about getting paid up front, only once the mortgage offer has been received.
He must have progressed the application as they took the booking fee, got the survey done etc and then everything just went silent. I even received a letter asking me to check that the mortgage firm has my correct details for taking the mortars payments once approved.