fees free mortgage brokers

evosy1978

hello all,

firstly i hope this is the right place to post.

As you are aware MSE always talks about one particular mortgage broker L&C, who are WoM and are Fees Free.

Could someone please clarify how they make there money, i do realise they must get a % from the lender. My issue is, - does this % vary from lender to lender and how do i know they are not just offering me a mortgage from a lender who pays them the highest.

thanks for your time.

mchu6am4

I am in the same boat, but I believe (or should think so) that they get a variable commission from the lenders, hence I am also a bit sceptical of whether I'm being recommended the best product or best 'commission'!

LouBlue

evosy1978 wrote:

hello all,

firstly i hope this is the right place to post.

As you are aware MSE always talks about one particular mortgage broker L&C, who are WoM and are Fees Free.

Could someone please clarify how they make there money, i do realise they must get a % from the lender. My issue is, - does this % vary from lender to lender and how do i know they are not just offering me a mortgage from a lender who pays them the highest.

thanks for your time.

I used a broker from L&C. He was upfront and told me he would get a one off fee from the lender but would offer me the best deal for me. However, he did try and shove the extras down my throat a bit...ie life cover, critical illness...so he was obviously going to get more for that, even though he knew we couldn't afford it. A bit annoying, stick to your guns with what you need and what you can afford.

dunstonh

I answered on your other post but here is the response I gave on there:

Yes it does vary. You should ask to see the research. A face to face mortgage adviser (or postal) is no different on that front either. Although with many you will see the research being done in front of you and can see the results as they appear.

payless

Could someone please clarify how they make there money, i do realise they must get a % from the lender. My issue is, - does this % vary from lender to lender and how do i know they are not just offering me a mortgage from a lender who pays them the highest.

best way is to use an independent... who will offer you a clearer approach ... ie an agreed level of earning from a case ... if commission is more , then you get the difference back, if the commission is less you top it up with a fee .

( obviously will depend on the level of agreed earnings)

This way the adviser has nothing to gain from recommending a bigger commision payer .

Martin discounts this approach in his articles, ( incorrectly in my view) instead making the assumption that the "total income" always means more than the commission

Conrad

LouBlue wrote:

I used a broker from L&C. He was upfront and told me he would get a one off fee from the lender but would offer me the best deal for me. However, he did try and shove the extras down my throat a bit...ie life cover, critical illness...so he was obviously going to get more for that, even though he knew we couldn't afford it. A bit annoying, stick to your guns with what you need and what you can afford.

Exactly the point Ive been debating with some of the 'free' brokers who post here.

Business models dictate that to function in this market you have to earn more than just the lender commision. Fee charging brokers are up - front about this, however the 'free' brokers imply there have your best interests at heart, yet dont reveal just how badly they need to sell you insurance.

Go to any mortgage brokers morning meeting and what you will see is all thier mortgage and life commisions written on a board.

Indeed those not producing enough insurance commision are eventually sacked, and this is described as 'not being able to meet key performance indicators'. Any employed broker denying this should be given a wide birth.

In the end in this life there really is no such thing as a free lunch.

Conrad

dunstonh wrote:

I answered on your other post but here is the response I gave on there:

Yes it does vary. You should ask to see the research. A face to face mortgage adviser (or postal) is no different on that front either. Although with many you will see the research being done in front of you and can see the results as they appear.

Also ask to see the individual illustrations (KFIs). At the back of each is a section which shows the commision due. If the broker has not manipulated the figures you will see lenders remuneration varies.

Note for example that a £100000 5 yr fixed rate with N Rock pays 0.5% + £150 bonus if submitted online, so thats £650.
Nationwide would pay o.35%, thats £350. Quite a difference, and remember that adviser may have his own children to feed, personal gain WILL come into it.

By paying a modest fee, the temptation to recommend higher commision deals is reduced.

dunstonh

Go to any mortgage brokers morning meeting and what you will see is all thier mortgage and life commisions written on a board.

Indeed those not producing enough insurance commision are eventually sacked

Salesforces like that account for the majority of complaints. The pressure put on the lower performers can lead to higher commission products being sold and the pressure on the top performers to get the extra incentives does the same.

The salesforce model has been responsible for most of the problems in financial services for many years.

toonfish

Conrad wrote:

Also ask to see the individual illustrations (KFIs). At the back of each is a section which shows the commision due. If the broker has not manipulated the figures you will see lenders remuneration varies.

Note for example that a £100000 5 yr fixed rate with N Rock pays 0.5% + £150 bonus if submitted online, so thats £650.
Nationwide would pay o.35%, thats £350. Quite a difference, and remember that adviser may have his own children to feed, personal gain WILL come into it.

By paying a modest fee, the temptation to recommend higher commision deals is reduced.

Once again you are tarring all the fee free brokers with the same brush, and also hiding your status as a fee charging broker. Where do you come up with this business of "manipulating the KFI".

Obviously you would never place a client with anyone except the company offering the lowest procuration fee?

toonfish

dunstonh wrote:

Salesforces like that account for the majority of complaints. The pressure put on the lower performers can lead to higher commission products being sold and the pressure on the top performers to get the extra incentives does the same.

The salesforce model has been responsible for most of the problems in financial services for many years.

exactly right

arkie

As a fee charging broker, i always place the client on the best deal, im not commission driven and I dont push insurance sales, I used to be a fee free whole of market broker but i needed insurances sales to make ends meet, i have stopped selling insurances, started charging fee's and now the appointments are easier because I tell the client that I do not sell insurance.
There is nothing wrong with charging fees or not charging fee's , everyone to their own , but I can assure my clients that proc fee's do not come into the equation.

iam a mortgage adviser