Mortgage broker fee reasonable?

roarke80

Hi, I am in the middle of arranging a complicated buy to let mortgage and have finally found a broker who seems to have a willing lender. The only issue is that he wants a total of £2500 broker fee. £750 has to be paid upfront in order to even find out how much the lender is willing to lend, at what rate etc, i.e. the heads of terms (?). And the remaining has to be paid upon offer, not completion of the mortgage.

I am wondering if this is reasonable. Other brokers I have spoken to have immediately given me a rough quote from the lender, which states the amount they're willing to lend, fees, interest rate and terms. My understanding is that they only charge the broker fee should I choose to put in an application or if the mortgage completes.

Can anyone help please? He's the only broker left who seems to be able to get me a mortgage but I'm afraid I might be wasting my money. Thanks very much!

_Andy_

What makes him better? You mention he's the only broker left, what does he feel he is offering that others can't?

£750 upfront seems high

ACG

If its complicated and he/she is able to do something that other brokers cant then hes in a pretty strong position.

Personally i dont think you should be paying £750 on a wing and a prayer. I would at the very least expect him to get you a decision in principle - maybe paying £100 to cover the work he has done in case it doesnt go ahead.
As for the overall £2,500 it might be a little on the high side but we generally charge a 1% fee for complicated cases - so if its a £250k mortgage then we would charge you the same (although at that sort of price we would be open to negotiation). So its difficult to say if its steep or not, it all depends on how difficult it is to place and what other brokers have said.

roarke80

Thanks for your reply. He's not better than the other brokers I've spoken to, but he's the only one left who says he has a willing lender. Conversations with other brokers have fallen through because my case is a little complicated so he's just my only option left.

The mortgage will be around £250k so I think 1% is standard (although I didn't know I could negotiate that). However, I'm not comfortable paying £750 just to find out what rate / how much the lender can lend. It sounds like it is £750 just to get a decision in principle. Is this normal at all?

I've had another broker who worked really hard to get me a deal which just fell through right at the end. Her broker fee was only £350 if it had gone through, although the interest rate was quite high.

Also, if I do go ahead with this, should I be seeking a sort of written agreement to make sure I don't have to pay the fee in case the decision from the lender was not obtained?

Thanks for your help!

Thrugelmir

roarke80 wrote: »

Conversations with other brokers have fallen through because my case is a little complicated so he's just my only option left.

Complicated or unusual circumstances?

To warrant a fee of that size on those terms seems a very one sided arrangement. Suggesting there's a shark in the water.

roarke80

Thrugelmir wrote: »

Complicated or unusual circumstances?

Well it's complicated because

- We're on Tier 1 visas
- We are after a buy to let mortgage through a limited company
- We are first time buyers and landlords in the UK
- and finally the property we're looking at is on a high floor of a relatively new build.

The other prospective lender rejected us cos of the property in question and it's been hard to find another lender who can work with all our issues.

Thrugelmir

roarke80 wrote: »

- We are after a buy to let mortgage through a limited company

That's going to be a particularly thorny issue.

What's your aim of buying through through a Limited Company?

ACG

If you have got a broker doing this for £2500 i would snap their hand off.
Im not one to turn away any complicated cases but i wouldnt have the foggiest where to start.

I would argue the £750 upfront payment otherwise they could just whack an application in with any lender for the £750. Maybe reduce it to £150 or so but i wouldnt expect it to be much more than that upfront.

kingstreet

I'm trying to get a BTL at 75% on a newbuild flat on the fourth floor of four and I'm having the devil's own job finding someone.

Rent is well within 125%/6% formula.

Lenders don't like newbuild flats and those that do top-out at 65% or 70%. I'm left with one lender, Woolwich, unless any of the others have any bright ideas?

Dave_Ham

With those details would be Woolwich all the way Kings.

OP - Is it essential to buy through the limited company, I mean absolutely essential?

I think the 1% is what you will pay as this will be a non standard lender. The £350 would have been an easy application.

The £750 upfront just to find out is a liberty, although if it is refundable if no mortgage offer then fine. If not, I think steer clear

roarke80

Thanks for your replies.

Yes it is absolutely essential to buy through a limited company I'm afraid, I have explored all options in my situation and this is the only possible way for me to go ahead with the property purchase.

I'm happy to pay the 1% or so if I can get a competitive rate.

However I'm just worried about the £750 up front. I find it strange that I cannot get any rough details of the rate or amount of the loan without paying upfront.

He has also said that the rest of the fee is due upon offer, not upon completion. Does that mean the mortgage can fall through in the end and I would still owe his broker fee?

Should I expect written agreements / contract with any broker I work with or are all these agreements done verbally?

In the meanwhile if any of the brokers on this forum think they might be able to help with my case, please do pm me. Many thanks for all your replies.