Why the market is difficult and unfair

amnblog

One of the biggest problems for the borrower in the current market is deciding who to believe.


A tale


A young couple approached us via our website about six weeks ago.


They were trying to move to a larger home and had been rejected by their current lender. They had tried a number of alternate lending sources without success.


Their situation was particularly complex but we felt there was some chance we could get the borrowing placed.


They asked us to help and we arranged their mortgage offer in principle within 36 hours. It was a longshot and I must admit, even I was surprised we secured their offer.


We then told the couple what we needed to go to full application and waited for their response. The result, a lot of positive talk but no action.


After a week our couple went a bit deaf on us (which is not unusual) but we persevered.

They were they said - 'definitely proceeding but had been a bit busy.'

Now we knew something was up - so a week later after we had asked if we should close the file, we manage to start a frank discussion and gave them the opportunity to tell us what was actually happening.


They told us that since engaging us they had contacted a lender direct who told them they would do the case. (the rate was a little better than the rate we had secured for them).


That is strange we replied - you are outside of that lender's criteria and they do not make exceptions.


Just to be sure we checked with our contacts at the lender. They confirmed there is no way they would lend to our borrowers.


We called the couple back and told them they were 100% wasting their time with the other Lender.


Let's stop for a second and look at it from our couple's point of view.


The first lender told them yes, then no after several weeks. The lenders they approached all took several days to say no.


Then a broker they have not heard of before comes back to them in under two days and tells them everything is OK and they are good to go.


Meanwhile other searching reveals a major lender who also tells them yes and offers a lower rate.


Who do you believe? - the multi million pound lender, or the broker who you only heard of last week.


What now?


My experience tells me one route is almost certain to get them in their new home. The other will lead to more unnecessary expense, frustration, and no new home.


I must say I do sympathise with their action in trying to get the lending from the better known source at a lower promised rate.


The problem is I can see them 'out in the minefield' but they cannot hear me shouting at them to come back.


I suspect they will now return to us to bail them out when it is too late and, as a result, they will lose the purchase.


This kind of scenario is all too common as the market is so complex and over regulated, yet staffed by so many people with scratchy training and knowledge.


In your view what is the best way for you, the borrower, to decide who to believe?

Thrugelmir

amnblog wrote: »

They told us that since engaging us they had contacted a lender direct who told them they would do the case. (the rate was a little better than the rate we had secured for them).

With the proviso SUBJECT TO.


That's people for you. You never stop learning through life. So hopefully they'll now be a little more wiser.

billybear1

I have been burnt by a bad broker previously, and another one had to bail us out, this is when I was categorised as sub prime.

I would, even though I have been burnt use and trust an advisor, because as you say the mortgage sphere is a minefield.

I am in fact currently using an advisor to turn the house I bought into a BTL - then buy a new property. Without their experience, I would not have been able to place this personally.

Thrugelmir

amnblog wrote: »

This kind of scenario is all too common as the market is so complex and over regulated,

On that point I disagree with you. Light touch financial regulation is the cause of many problems we face today. Merely returning back to the way things used to be done. Though now with far more technology. Is in the main an educational matter.

danielanthony

I got told by two brokers that Halifax would not give me a mortgage.

Halifax gave me a mortgage.

Luckily I didn't listen to the brokers or we'd still be in our old house!

Thrugelmir

danielanthony wrote: »

Luckily I didn't listen to the brokers or we'd still be in our old house!

Reading Amblog's post it did say "They were trying to move to a larger home and had been rejected by their current lender. They had tried a number of alternate lending sources without success."

A different situation to yourselves.

TBeckett100

amnblog wrote: »

One of the biggest problems for the borrower in the current market is deciding who to believe.


A tale


A young couple approached us via our website about six weeks ago.


They were trying to move to a larger home and had been rejected by their current lender. They had tried a number of alternate lending sources without success.


Their situation was particularly complex but we felt there was some chance we could get the borrowing placed.


They asked us to help and we arranged their mortgage offer in principle within 36 hours. It was a longshot and I must admit, even I was surprised we secured their offer.


We then told the couple what we needed to go to full application and waited for their response. The result, a lot of positive talk but no action.


After a week our couple went a bit deaf on us (which is not unusual) but we persevered.

They were they said - 'definitely proceeding but had been a bit busy.'

Now we knew something was up - so a week later after we had asked if we should close the file, we manage to start a frank discussion and gave them the opportunity to tell us what was actually happening.


They told us that since engaging us they had contacted a lender direct who told them they would do the case. (the rate was a little better than the rate we had secured for them).


That is strange we replied - you are outside of that lender's criteria and they do not make exceptions.


Just to be sure we checked with our contacts at the lender. They confirmed there is no way they would lend to our borrowers.


We called the couple back and told them they were 100% wasting their time with the other Lender.


Let's stop for a second and look at it from our couple's point of view.


The first lender told them yes, then no after several weeks. The lenders they approached all took several days to say no.


Then a broker they have not heard of before comes back to them in under two days and tells them everything is OK and they are good to go.


Meanwhile other searching reveals a major lender who also tells them yes and offers a lower rate.


Who do you believe? - the multi million pound lender, or the broker who you only heard of last week.


What now?


My experience tells me one route is almost certain to get them in their new home. The other will lead to more unnecessary expense, frustration, and no new home.


I must say I do sympathise with their action in trying to get the lending from the better known source at a lower promised rate.


The problem is I can see them 'out in the minefield' but they cannot hear me shouting at them to come back.


I suspect they will now return to us to bail them out when it is too late and, as a result, they will lose the purchase.


This kind of scenario is all too common as the market is so complex and over regulated, yet staffed by so many people with scratchy training and knowledge.


In your view what is the best way for you, the borrower, to decide who to believe?

If the WOFTs come back, agree a fee in advance. Clearly they have no regard for the work that you have done. If they don't agree to the fee, let them screw it up.

zarf2007

billybear1 wrote: »

I have been burnt by a bad broker previously, and another one had to bail us out, this is when I was categorised as sub prime.

I would, even though I have been burnt use and trust an advisor, because as you say the mortgage sphere is a minefield.

I am in fact currently using an advisor to turn the house I bought into a BTL - then buy a new property. Without their experience, I would not have been able to place this personally.

While I'm sure there are some worthy brokers out there, how can you really trust a profession that ultimately works from commission? I really think the term 'independent financial advisor' is a bit of a joke as many will only show you the deals they are most likely to earn more from (they are in business to make money after all).

Brokers tied to estate agents are even more biased to help themselves and the company they are tied to than the customer.....tbh in my opinion its the financial advisor industry that needs more stringent regulation to weed out the cowboys from those who are genuine.

As for the OPs case, as in any walk of life you always have people who thing they can become 'expert' in any area to save some money, usually they are the same idiots who sell houses with expert DIY work which save them hundreds and later costs them thousands.

My analogy to these scenarios is, I wouldnt become a doctor and self diagnose an illness, thats what people who are experienced and qualified in that specialist field are there for, therefore why would I suddenly be an expert broker/builder/plumber/decorator* (*delete as applicable) just to save a small amount of money.

nobodysdriving

I agree that the commission should be scrapped, that way they would be 'really independent' advisors.

OR a law should be passed that the commission they get is the same from each lender.

kingstreet

On a typical high street mortgage the commission ranges from 0.32% to 0.35% of the loan amount.

On a £200k mortgage (which is a once in a blue moon transaction for me) the difference is £60.

Do you really think I'd risk a 30 year career by mis-advising someone to earn an extra £60?

We have to justify our lender and product recommendation in writing to the client and our network's compliance team checks our paperwork to ensure we are not using particular lenders for commission-bias.

tvfreek

Mortgage Brokers are not paid commission

Salesman are paid commission, as in PPI - that worked our rather well didn't it??

Brokers are paid a procuration fee - perhaps look up pro cura