Good Mortgage Broker Advice??

barney_1972

I have just met face to face with a Mortgage broker introduced to me by moneysupermarket.com.

The meeting was arranged by a call back after i left some details via their website.

The broker seems genuine and declares himself as 'Independant' and 'Whole of market'.

Although no concrete fee value has been given he has said the process costs him roughly about £500 (he has to pay moneysuperket.com for the lead also). I think his commission from a typical lender for the transaction is aprrox £320.

This would leave the difference (£180 i guess?) as my fee to pay him.
However he has said that depending on any other products i purchase via him will cover this difference.

(ie merely taking critical illness cover via him would mean no difference to pay)

I have £80,000 equity in my current house and am looking to borrow another £80,000 for a £160,000 house purchase.

He has so far shown me many varying deals, some which involve a comination of arrangement fees, valuation fees or booking fees (some are zero value, others are not).

Because i was turned down by my current mortgae provider (Nationwide) although Nationwide said it was not for credit scoring reasons but the underwriters decision, the independant has asked for me to obtain an experian credit report and forward it to him so he can rule out any issues.

He also says that he can approach lenders on an informal basis to gauge the likelyness of being accepted before actually doing a credit score as this will protect my credit rating from unecessary searches.

Anyway to the point:- Can anyone advise on the above? Does this sound like normal practice (it seems reasonable to me), is their anything i may be missing?

Any advice would be warmly welcomed.

Barney

Rick62

Sounds more or less OK.

The process won't cost him £500, although that is a reasonable amount if you cost his time. On a £160k mortgage he should make about £500 fee, so there is really no need to charge you anything.

His request for you to get your credit report and for him to then informally approach the lenders before applying seems very sound and professional.

The real test is if he then comes up with good results, but so far it sounds like he is taking a thorough and correct approach.

barney_1972

Thanks Rick62

Rates shown so far were typically between 4.67% and 5.1%.

Better than Nationwide who (before declining me) were quoting 5.38% for the new mortgage part and 4.99% for my existing mortgage with them.

Rick62

Sounds spot on. The best rate won't necessarily be the cheapest, but take account of fees etc, but sounds like your broker is showing you the best deals.

Just make it clear you don't expect to pay a fee, he'll get a reasonable proc fee from the lender and you may place some insurance either now or in the future.

MortgageMamma

I dont like the bit where he said, the process will cost him £500 but depending on what other products you bought through him that could repay the difference. He should'nt be waffling on at you about buying the lead either - I think thats very unprofessional behavior - although I don't disagree with buying leads - it sometimes helps those new to the industry without a big client bank, or just as a top up when things go quiet.

I'm not saying you shouldnt use this adviser, on all other counts you mention he seems alright, but don't be pressured into buying any unsuitable or unwanted ancillary products jsut to get the mortgage.

payless

As I read it that the loan is going to be £80K, ( not £160 as Rick thinks) on a mainstream lender the commission is likely in the £240 - £320 ( more with some flex deals) , then yes if he expects £500 it sounds like there wiull be a top up fee . He's allowed to charge it - if agreed up front Not saying thats right or wrong- thats for you to decide if he's worth it

Any fee needs to be clearly set out in his IDD , and agreed by you before the clock starts ticking.

Suggesting he would waive it if taking other products is not a bad thing, but does muddy the waters with regards to how its recorded ( what happens if you cancel ?)

Personally I believe some bnrokers try and recover the cost of buying in leads ... so in long run - the lead "farm " wins and the consumer loses. For the life of me I can't understand why people would use one of these "lead farms" instead of asking for friends for recommendations- as the quality of thew adviser is totally unknown.

Rick62

I think there is nothing wrong with lead firms, but their charges are not that high. Yes, sorry, it does look like £80k mortgage, so the lender fee would be only about £250.

payless

lead firms or farms as I call them-

the consumer has no idea what basis the adviser works on - fees etc

These firms advertise without having to display the usual warnings or disclosures ( and get away with mentioning bad credit without typical APRs displayed)

Saw one "farm" yesterday that was run by a marketing firm, but only introduced to one firm - no disclosures!

barney_1972

I have not been shown an IDD. (what is this?).

Is this something i should have been shown?

As i said previously, this guy does seem genuine but then again if appeared anything else, he wouldn't do much business.

Should i know upfront exactly how much each option (with/without excess products) the deal will cost and should this be clearly set out in a document before i start?

Has the clock (the money clock) in the brokers eyes already started (it was an home visit) and if i decide not to proceed any further will i owe him a fee at this point in time?

I understand that myself and the broker must arrive at a deal which is good for both of us but i do not know this guy personally and am unsure as to how to check his credentials.

Any help would be greatly appreciated.

dunstonh

I have not been shown an IDD. (what is this?).

Is this something i should have been shown?

Its the very first document that is given to you. It says key facts in the top left corner. It shows on the first page the status of the adviser. An adviser that is whole of market would have no reason to hide it and actually have good reason to show it as it puts them top of the tree. A tied or panel adviser wouldnt want to show it to you as it confirms their limitations but they are still required to show it and describe key points.

It also confirms the no fee and commission basis.

As i said previously, this guy does seem genuine but then again if appeared anything else, he wouldn't do much business.

Whilst we cannot comment on this adviser, you ought to be aware that over 65% of consumers researched who had sought advice from a tied agent thought their adviser was independent when they were not.

This key facts/IDD document is an FSA requirement and confirms the status in no uncertain terms. You must have it and failure to supply is a breach.

Has the clock (the money clock) in the brokers eyes already started (it was an home visit) and if i decide not to proceed any further will i owe him a fee at this point in time?

First appointment is free (you cant be charged for something until you know the charges) and a fee agreement would be required which you need to sign. Without that the fee cannot be enforced.

jamesd

barney_1972 wrote:

Although no concrete fee value has been given he has said the process costs him roughly about £500 (he has to pay moneysuperket.com for the lead also). I think his commission from a typical lender for the transaction is aprrox £320.

This would leave the difference (£180 i guess?) as my fee to pay him. However he has said that depending on any other products i purchase via him will cover this difference.

It sounds as though I would tell him that I don't want to do business with him, regardless of the quality of his mortgage advice.

1. He broke the rules by not disclosing his fees in an IDD

2. He sought to create an obligation in your mind to ensure that he earns 500 or buy other products from him and left you unclear about what the actual charge would be.

3. I assume that he will seek to make at least 500 (making no money according to his figures) with your commitment to this helped by his breach of the rules.

The combination of a breach of the rules and apparently exploiting that breach at your cost and to his benefit means that I suggest that, regardless of the quality of his advice, you do not do business with him.

There are other advisers out there who do follow the rules, so you can be more sure that the mortgages they recommend are also compliant with the rules about having to be the best for you. One breach to his advantage and an attempt to manipulate you into buying other products from him already is not encouraging.