Independent Financial Advice, Advice!

Mr_Adam

Hi

Quick bit of advice please.

2 years ago I bought a new build property using Taylor Wimpey's gifted deposit. For example I paid £10k and they paid £10k towards a £20k total deposit. I dealt with an independent financial advisor who told me that there was only one mortgage product that I could use for this type of gifted deposit and that the interest rate was 5.99% (clearly quite high). 2 weeks later after applying for the mortgage, the rate had gone up to 6.19%, and so when we finally got confirmation of acceptance, the rate was .2% higher. My IFA told me that there was nothing we could do as this was the only product on the market, that there was nothing else.

Fast forward 2 years and the same IFA has offered to help me find a new product as my old one has ended. I have found a good First Direct product which has no "minimum term" (i.e. not locked in for 2,3 years - which is important for our situation as we may look to move into rented in next 2 years). I asked the IFA if they could find better. They've come back to me and said that "no deals exist on the market that aren't fixed for at least 2 years". I've asked them how this can be true as I've found this one from First Direct, and there response is "First Direct do not deal with intermediaries".

Now - First Direct not dealing with intermediaries is not the problem, the problem is that 2 years ago I signed up to a high interest rate due to 'independant' financial advice from an IFA that I now know is not able to access the entire market. Do they still count as being independent if they are dependent on finance institutions allowing them access? Especially considering she openly said to me that no deals existed - not that no deals existed that she could use.

I don't feel like the advice given to me has been independent, and if I'd known this 2 years ago I'd have used 2 or 3 different brokers, and shopped myself.

Any advice?

ACG

Independent means they offer to rebate any commission paid.

That rate you have is only high when you look with hindsight, i dont think it was high at the time, it sounds like it was about right.

dunstonh

Do they still count as being independent if they are dependent on finance institutions allowing them access?

For the IFA to work on a full whole of market you would need to employ them on fee basis and agree that they consider all deals.

if you employ them on commission basis then they will only consider commission paying deals via intermediaries.

I don't feel like the advice given to me has been independent

The term IFA does not apply to mortgages. Indeed, most IFAs dont do mortgages. An IFA doing mortgages does so with a mortgage adviser hat on. Not an IFA hat.

kingstreet

Mr_Adam wrote: »

2 years ago I bought a new build property using Taylor Wimpey's gifted deposit. For example I paid £10k and they paid £10k towards a £20k total deposit.

I expect the total deposit was 10% and you had a choice of about one lender, Skipton BS by any chance?

Most lenders will not do more than 80%, possibly 85% on a newbuild, so the odd lender who will do 90% tends to get to name its price...

Let_Us_See

Mr_Adam wrote: »

I don't feel like the advice given to me has been independent. Any advice?

Clearly, you didn't understand then or even now, the meaning of "independent" when applied to a mortgage adviser and the term has nothing to do with providing advice.

Independent
This purely means that the adviser/broker offers the client the option to how their renumeration is received and has absolutely no reference whatsoever to the number of lenders that the adviser may or may not have access to, or whether he charges or not charges an additional fee.

If an independent adviser, the client has the option of selecting:

1. Paying a fee to the adviser with the applicant receiving the lender's procuration fee on completion of the mortgage or,
2. Electing not to pay a fee with the adviser receiving a procuration fee on completion from the lender for submitting the application.

In both of the above options the adviser may or may not charge an additional fee.

Very few applicants select option 1 as most advisers request non-refundable upfront payment of the fee and as there is no guarantee the mortgage will complete, the rebated lender's procuration fee may never be received. Often the initial fee will be higher than the payable procuration fee - so again, it is a no-brainer. However, with large mortgages, it is possible the lender's procuration fee will be higher than the upfront fee and the applicant may elect to pay a fee and accept rebate of the procuration fee. Once again if the mortgage fails to complete, the applicant has already paid a fee and will not receive the procuration fee. These are the reasons why few applicants select the "fee payment" option.