Need urgent advice on broker fee

p_wallior

I have been looking to remotgage away from a 5.83% fixed rate that I am tied in for another 18 months. A broker company called LWF came to look at my case and found what looks like a good deal to me.
My only concern is the fee they want to charge me. Their deal is a mortgage lifetime service with an upfront fee of £1890. I was told that when my 3 year tracker deal comes to an end, they would come back to advise me and organise my next remortgage for free, and so on until the end of my mortgage.

My gut feeling is that I am not interested in a 15 year long service, I just want to pay for this remortgage now, as there's no guarantee LWF will still around in 3 years time, let alone 10 years time...

The advisor discussed this with his boss and reviewed the fee down to £995, which includes all the legal cost. The only other cost to me would be the £99 booking fee.
He said if I'd use them again in 3 years time, I'd only pay £495 fee and then it would be free for the remainder of the mortgage.
I always thought that a remortgage would be a one-off fee for that specific transaction...

Can anybody please advise whether this is common practice?

Many thanks in advance!

Phil

kingstreet

Sounds garbage to me. A realistic fee of around £500 should be charged for a simple remortgage. The mortgage deal may well have free legals attached, so if the broker is trying to suggest the legals come out of his fee, this may not be true.

If the broker is using a commission-paying lender/deal he may be getting around 0.3% of the mortgage amount on top of any broker fee.

I'd find yourself an independent broker who will agree a fee with you a lot more realistic than what you've been quoted so far. An independent will also rebate to you any commission paid by the lender. Alternatively, you may get a better deal from a non-commission paying lender and the fee you pay compensates the broker for the lender paying nothing.

As you say, paying "lifetime" fees is potentially wasted cost, particularly if you don't like the service you receive this time. You may not want to go back to this broker, even if he is still in business.

kingstreet

I forgot to say, ask friends and relatives for a recommendation. Failing that, let us know where in the country you are and one of us may be able to make a recommendation for you.

Wh05apk

If you are only tied in for another 18 months, I would be amazed if they can save you enough to justify paying the penalty to come out of your current deal?

opinions4u

You pay the fee.

The company liquidates itself.

You don't get the lifetime service.

(It's rare these days that paying an ERC is worthwhile when there's only 18 months left on your deal - how much is your ERC, how much is your mortgage, and what sort of rate/fees does remortgaging get you?

p_wallior

kingstreet wrote: »

I forgot to say, ask friends and relatives for a recommendation. Failing that, let us know where in the country you are and one of us may be able to make a recommendation for you.

I'm in the Northampton area. Thanks!

p_wallior

opinions4u wrote: »

(It's rare these days that paying an ERC is worthwhile when there's only 18 months left on your deal - how much is your ERC, how much is your mortgage, and what sort of rate/fees does remortgaging get you?

Mortgage is £94000, ERC is £2900.
The mortgage recommended by the advisor is a 3 year tracker at 2.79% (base rate + 2.29%) with Leek United BS. I can overpay up to 10% per year.

The remortgage would cut my payements by about £10 a month but it would reduce my term from 16 years 7 months to 13 years.

My main goal is not to reduce my monthly payments but the overall interest paid / overall cost of the mortgage.

p_wallior

kingstreet wrote: »

Sounds garbage to me. A realistic fee of around £500 should be charged for a simple remortgage. The mortgage deal may well have free legals attached, so if the broker is trying to suggest the legals come out of his fee, this may not be true.

The legal fees are covered by the broker fee, but the mortgage includes a £250 cashback towards legal cost.
They also get a procuration fee of £344 from the lender on top of my fee.

_Andy_

Why not just reduce the term of your existing mortgage?
the 'advice' you've been given seems pretty shoddy (and expensive)

Wh05apk

This would only really be worth doing if you have minimal fees and you are happy to take a risk, your penalty is about 3%, the tracker offered will save you 3% (assuming rates do not move) so you will take a year to break even on the penalty, any fees/costs will extend the breakeven period.

If rates move, then you could easily be at a loss.

Also personally I would not touch a 3 year tracker, either a short term tracker or long term fix, being tied in for 3 years on a tracker is too risky, I appreciate rates will probably be stable for sometime, but, you have to consider what rates could be in 3 years time, I suspect they will be moving upwards (or at least lenders rates will be) back closer to long term averages.

kingstreet

I agree with the others. I was so busy being indignant at the broker's charges I didn't bother to look at the fundamental issue - is it worth it. It doesn't appear to be!