Calling Financial Advisors

givememoney

Our son is in the early stage of buying a flat.


He went to the Financial Advisor connected to the Estate Agent. We went along for the ride to.


He was very thorough and laid out all costs that would be incurred.


A couple of questions though;


He is going to charge what is termed an Application Fee at start of process and another one on completion. The cost of these two items is £400.


He then tells us if our son has critical life, redundancy sickness and contents insurance through their company these charges will be waived.


It states on the bottom of the form the FA filled in for our son that this is indeed the case.


What I would like to know, is this common practice? We thought the FA makes his money by arranging the mortgage?

ACG

Commission from the mortgage is very little, so in my opinion it needs topping up with a fee.

£400 isnt too bad, some would say its a expensive others would say its not enough.

Some brokers do waive their fee if you take out insurance as the commission can be quite good on protection business. However if your son cancels the policy(ies) within 4 years you will find he probably has to pay more than £400 in commission clawback.

Personally i tend to charge a fee on the mortgage depending on the work involved (i do not charge a set fee), i do not waive fees in lieu of commission as i see them being separate and if you want to cancel the policy down the line you are free to do that - but every broker has their own methods.

Let_Us_See

1. The estate agent is working on behalf of the vendor, and I would never, ever recommend you use their own in-house adviser due to conflict of interest and other factors.
2. I have no problem with charging a fee, but not an upfront fee. Pay a fee on a suitable offer of mortgage.
3. Do not agree other policies instead of paying a broker fee. Firstly, all these policies may not be necessary, plus if the cost of these policies in uncompetitive, as often in-house adviser have restricted panels, the eventual long term cost could be a lot higher than paying a straightforward fee.

Find out all the costs from in-house adviser (if you must), check out comparative costs from other brokers etc, and then reach and a decision. Finally, do not accept any solicitor or surveyor recommended/referred by estate agent. Time to take charge.

ACG

I echo the above, EA based brokers are a big no no.
Paying upfront fees is also a big no no. What happens if the broker can not get your son a mortgage, hes £400 out of pocket.

givememoney

Let_Us_See wrote: »

1.

Finally, do not accept any solicitor or surveyor recommended/referred by estate agent. Time to take charge.

Thanks for your comments.


How much roughly do you think a solicitor should charge for conveyancing on a flat worth £119,995?

givememoney

I thought I would report back on this.


Today my son moved into his flat.


I must say despite all our fears, the mortgage broker who was attached to Estate Agent, he is in fact one of the directors, gave expert advice in a professional and friendly manner.


The purchase went through without a hitch and took the customary 3 months.

amnblog

What is the problem with an upfront fee?

ACG

amnblog wrote: »

What is the problem with an upfront fee?

Nothing if its refunded should the broker not be able to get a mortgage.

If its non refundable then the clients have paid a fee and got nothing but a credit search or 2.

wrkactjob

amnblog wrote: »

What is the problem with an upfront fee?

ACG wrote: »

....Paying upfront fees is also a big no no. What happens if the broker can not get your son a mortgage, hes £400 out of pocket.

This maybe?

amnblog

So upfront fees are acceptable if they are refundable?

How can the broker know for sure if they can get the client the mortgage without doing the research work?

Who pays for the work?

ACG

I only take the work on if im confident I can get the mortgage.

If im not confident its then down to me to decide do I risk doing the work and not getting paid and put it down as educational if not or leave it to someone else to take on.

Either way, the client is paying for a mortgage, not for me to sit there and see IF i can get them a mortgage.

I dont go to tesco and pay for the food I want, I pay for the food I get. I dont see why customers should pay me if I dont get them what they want. I do reserve the right to charge a fee if the customer pulls out but thats entirely different to me not getting them a mortgage.