Mortgage Broker Query

Kynthia

I've just asked a broker to find me the best deal and she's suggested a mortgage from Accord. However i'm pretty sure it's not better than two other fixed rate mortages from Chelsea BS and Yorkshire BS. I've looked at the cost of interest plus arrangement fee over the length of the fixed term and it's definitely more than the other two, and it also pays off slightly less of the capital outstanding too. Yet when I queried it, she said that it was the best according to the total paid over the fixed term.

So can anyone tell me why Chelsea and Yorkshire BS aren't on my broker's list? I've used a uk mortgage amortisation device to work out the total payments along with comparing the total interest paid over the fixed and the fees and I can't see she's right, and i'm good with numbers.

kingstreet

Accord is Yorkshire BS group's intermediary arm. YBS and Chelsea are two other YBS group members and they do not accept business from brokers nor pay commission.

Presumably, you appointed a broker on a commission earning basis, so they will not consider products and lenders who do not pay them.

Kynthia

Ah,so if I offer to pay a fee instead this should change? I'm surprised they didn't just tell me this.

kingstreet

Many of us offer both options;-

whole market for commission paying products - we are paid by the lender, so only "source" from lenders/products which pay commission and this is usually on an advice and arrangement basis, with the broker looking after the application through to completion

or

independent - you pay the broker a fee, if there is any commission it is rebated to you at completion to offset the fee and direct to lender only products are sourced, but the broker cannot offer an arrangement service on the latter.

The Initial Disclosure Document provided by the broker should show the remuneration options in section "4. What will you have to pay us for our services?"

Kynthia

Thanks for your responses. I asked her if she did a fee option, but she said that lenders who don't offer commission don't deal with brokers, so that's not an option. That confused me because from research and the previous post I know there are brokers who do offer this service.

Should I find a new broker? Unfortunately I don't have any recommendations for the area I live in and am therefore restricted to Unbiased.co.uk.

kingstreet

If they wish, brokers can split their offering.

They offer advice and arrangement on a whole-market, commission-earning basis, but can also offer an advice-only fee-based service and recommend a direct deal they cannot arrange.

If they do the latter, they can arrange a commission-paying deal, but must rebate any commission against the fee they charge, to be able to deem they give "independent" advice.

Our IDD wording as as follows;-

No fee. We will be paid commission by the lender

or

A fee of up to £??? payable on completion and we will refund to you any commission that we get by the lender.

or

A fee of up to £??? payable at the outset and the balance of up to £??? payable on completion. We will also be paid by the mortgage lender

with the choice dependent on client circumstances and sometimes negotiation. We seldom move from charging £249 for the whole market commission-earning option and charge nothing at completion. This is because most of our clients would be worse off with the other fee-charging option, even with commission rebated.