Mortgage Broker fee

annied78

Hi, I recently remortgaged and used an independant broker who I have used for 8 years.

I agreed to go ahead with a remortage where a £400 broker fee would be included in the loan. This was to be sent to me and then I would pay the broker.

Prior to completion I had a letter from the broker asking for the fee, when I questioned this the broker said do not worry it's included in the mortgage, the lender will send you a cheque and you send that on.

Anyway I get a call after completion from the solicitors to say that it had taken place without the £400 being included. There was no way to reverse it.

Three weeks later I have recieved a letter from my broker asking for a cheque for £400. Now I told him when I agreed to the mortgage, and again before completion that I did not want to proceed with any product where I would have a bill.

Its my view that the mortgage brokers should have made sure that the amount included their fee before completion, that they have failed to keep in contact with the solicitors dealing with the remortgage, and the mistake is theirs. I just don't see why I should have to pay out of my pocket.

Anyone know anything about a case like this who could advise me?

GMS

If you have agreed the fee then it is payable.

Why did the broker not get paid directly from the solicitor? Did you sign a fee agreement allowing this?

Did you not check the amount to be borrowed was sufficient? Was the redemption figure for the previous mortgage higher then expected meaning no surplus? If so who gave the broker the figure to work from?

Could be any number of reasons here but ultimately you agreed to the loan amount and the fee so you are liable for it.

Could you not reach a compromise with the broker? Having used before you should have some kind of rapport with them

JimmyTheWig

annied78 wrote: »

I agreed to go ahead with a remortage where a £400 broker fee would be included in the loan.
...
Its my view that the mortgage brokers should have made sure that the amount included their fee before completion
...
I just don't see why I should have to pay out of my pocket.

I agree the broker should have made sure the amount was correct.
But I also think that you should have made sure that the amount was correct.
So maybe this should be 50:50 responsibility?

Does that mean I think you should only pay £200? No!
Because your mortgage is £400 less than it would have been if this had happened properly.
So you're not actually out of pocket by this money, just out of pocket by it right now.

I think you should pay the money, but I think it would be unfair of the broker to demand it all right now.
So maybe agree to pay £200 now and, say, £20 a month until you've paid off the rest?
Or see if they would agree, out of goodwill, to you paying, say, £350 now to settle it.

You need to play this fairly carefully as I doubt that you'd be entitled to any compensation for this mistake as you haven't really lost anything.
Unless you lose out particularly in paying this bill now it will probably actually save you money than if interest was charged on this amount for the next 20+ years.

kingstreet

Was it possible for the amount to be included in the loan? You aren't at a loan to value border, or affordability limit are you?

If you are, it may not have been possible.

Not forgetting, if the completion was part way through the month, the redemption figure may have been higher and you have saved a mortgage payment - so you may have the broker's slice still in your bank account.

GMS - are lender "free-legals" firms paying broker fees these days? I haven't done one for ages, so I wasn't sure if that's still not possible.

GMS

kingstreet wrote: »

GMS - are lender "free-legals" firms paying broker fees these days? I haven't done one for ages, so I wasn't sure if that's still not possible.

Good question. I have had firms claim to do so but not had one myself for a while. I would have thought the need to add a broker fee to the loan would have had the broker ensuring he would get it was more the point I wanted to make.

On free legals I have done recently any fee due has come direct from the client.

annied78

I gave the broker a copy of my mortgage statement from december 2012, he calculated the amount that I owed from that. The survey all valued up.

I know its a case that I would have paid it anyway if it were included in the mortagage and that I will probably be paying less if i pay the £400 quid now but the whole reason that I was remortgaging was that I am struggling to meet my existing financial commitments.

The broker has said that the solicitors completed before they could adjust the loan amount to take into account the shortfall from my current lender and their fee. I am assuming that the shortfall is due to the calculation that the broker did was wrong.

Aparently they asked to delay completion till they had amended the loan, they got the extra for the shortfall but not the fee.

I had signed an agreement with the solicitors to say if there was any shortfall I was happy for them to make it up.

kingstreet

Let me give you an example of what I was saying about the mortgage payment issue.

Let's say you owe £100,000 on day one of the month. If the interest rate is 4%, the interest is £333 per month. By the 28th day of the month, you owe £100,310.80. If you complete on that day, the redemption figure will be higher than at the beginning of the month.

If completion was three days later, you'd have paid the month's payment, so you'd have less money in your bank account and the redemption figure would be lower. There may then have been enough money to pay the broker.

So, if the broker tried not to "overborrow" your new mortgage, he may be losing out through little fault but care for his client. If the solicitor firm was a "free legals" package deal from the lender, they often do what they want, when they want and the broker has little/no control over them.

annied78

The solicitors were appointed by the mortgage company, that was included. The agreement was that they add the fee on, send me a cheque for the broker fee and I forward that on.

I had never come accross this before with any of my remortgages

kingstreet

The fee is included in the amount you apply for. It isn't a separately addable fee, like a lender's booking or arrangement fee. If the broker did not ensure it was included in the amount being borrowed, it couldn't be added later, without issuing a new key facts illustration and requesting a revised offer from the lender.

As I said, it may simply be the redemption figure was higher than expected at the wrong time in the month when the solicitor completed.

JimmyTheWig

What do you, yourself, think would be a fair outcome, OP?

annied78

I have just had an email from my broker to say he is waiving the fee because i am a long standing customer (8yrs plus), phew!

I am not being cynical about the fact this was after I requested a copy of the fee agreement which I signed!

Thanks for all your advise