I think the IFA is trying to rip us off?

bobbarley

We recently went to an IFA to get their take on the best mortgage in our situation etc.

He came back and recommended a Coventry Building Society discounted tracker mortgage over 35 years. Funnily enough I'd found the same mortgage myself by searching the net.

I looked through the illustration he did for us, and noticed he wants a £350 fee for setting up the mortgage. I instantly thought what the hell?

Is he honestly asking for £350, to set up a mortgage I could do myself???

homer_j_3

Did you find the deal before the IFA recommended it? If so you have done well to find the deal that your IFA feels is best for you. This is very unusual to be fair. The £350 fee will be his charge for his advice and processing and to deal with any issues that come up.

If you were to go direct and it problems happen you will have no comeback on the IFA by going direct.

I do find it very interesting that you found the same product from the many 10s of thousand products available out there. I would be putting the lottery on this week if I was you.

bobbarley

Yeah crazy eh? I heard a few good things about the CBS, so went to their website and looked through their mortgages. I knew I wanted a discounted tracker mortgage, and that one popped up. Was surprised when he recommended it too.

£350 doesn't seem to bad for him to sort everything out for us, but then the scrooge in me says that's £350 toward a new bathroom suite, or something like that :P

Also, am I right in saying if we get a 3 year discounted mortgage, we're locked into the mortgage for those 3 years?

silvercar

your not locked in, but if you redeemed your mortgage there would be a penalty to pay called an early redemption charge - only fair if they are giving you a discount.

I find CBS very helpful, the call centre is in Coventry and the staff are very knowledgable. They do have a tendancy to produce treeloads of paperwork though!

BTW I found my mortgage myself!

MortgageMamma

The IFA should have disclosed his fee at the initial interview when he presented you with a document called Key Facts About Our Services. This details the IFA's authorisation, the level of service you will be provided with, the market access he has and your options regarding his remuneration. It also has a section on the back should you ever need to complain.

It is not good practice to interview and make a recommendation to a client without discussing fee's with the first. However to be fair on the IFA he has a business to run and its all about profit - a good 10 hours often goes into a mortgage case if its done properly. I think that £350 is a fair charge, its not extortionate and if he's taking all the hassle away from the process then it could be worthwhile paying.

dunstonh

Did you sign a fee agreement? Without it, the fee is pretty much unenforceable. Were you told there was a fee before you started? If not, it cannot be enforced.

bobbarley

We haven't agreed to anything, we just asked for a written illustration, I've never even seen the guy face to face But the illustration had a £350 fee in there which I thought was a waste when I could just do the stuff myself.

MortgageMamma

why dont you ask him if he'll do it without charging the fee and see what he says

JoeK_3

bobbarley wrote: »

We haven't agreed to anything, we just asked for a written illustration, I've never even seen the guy face to face But the illustration had a £350 fee in there which I thought was a waste when I could just do the stuff myself.

You know, a mortgage is usually over a long period in time, usually 25 years and over this period you may want to remortgage about seven times, take out a home improvement loan, pay off existing debts like credit cards, take out mortgage protection and family protection policies.

In my opinion, that's a lot of decision making to do besides working and bringing up a family.

Unfortunately it could cost you a lot more than £350 getting things wrong during this period.

DIY mortgages are just that.

Sometimes people's walls fall down.

JoeK

dwsjarcmcd

JoeK wrote: »

You know, a mortgage is usually over a long period in time, usually 25 years and over this period you may want to remortgage about seven times, take out a home improvement loan, pay off existing debts like credit cards, take out mortgage protection and family protection policies.

In my opinion, that's a lot of decision making to do besides working and bringing up a family.

Unfortunately it could cost you a lot more than £350 getting things wrong during this period.

DIY mortgages are just that.

Sometimes people's walls fall down.

JoeK

How can this be the case if the adviser has recommended exactly the same product as the OP? I would also assume that if they went back to the broker to remortgage they would charge the fee all over again (and again, and again, in your scenario) and earn from the proc fee. Brokers, like the rest of us need to earn a living obviously, but in my view it is by providing a service that someone can't do themselves, which in this case hasn't happened.

Given the situation, you are paying this money for the broker to do the administration, that's about it.

If it were me, then if I was confident about that part, then I would do it myself and not spend the money.

JoeK_3

dwsjarcmcd wrote: »

How can this be the case if the adviser has recommended exactly the same product as the OP?

In this case it would seem that the same case was recommended.

dwsjarcmcd wrote: »

I would also assume that if they went back to the broker to remortgage they would charge the fee all over again (and again, and again, in your scenario) and earn from the proc fee. Brokers, like the rest of us need to earn a living obviously, but in my view it is by providing a service that someone can't do themselves, which in this case hasn't happened.

That is exactly my point. There are and will always be products that do not pay a procuration fee, both now and in the future. I personally would arrange one of these as long as I am being paid a fee for the advice.

Any consumer who does want to do their own thing is welcome to do so, but let it be on their head.

It is often the professional adviser that has to make corrective recommendation for clients that have made bad decisions (or none) on their circumstances.

Taking out a mortgage is a big decision, as is the potential remortgage, future loans, capital raising etc. and many consumers have had to pay dearly for bad decisions made by being locked into high redemption penalties, (and having to stay in standard variable rates longer than necessary), choosing a fixed rate at the wrong time, higher than necessary interest rates on loans etc.


My point is to the OP and points these out.

dwsjarcmcd wrote: »

If it were me, then if I was confident about that part, then I would do it myself and not spend the money.

As I have said earlier, a mortgage is over a long period in time.

All the best OP in your future quest.

JoeK