Mortgage broker - is this a reasonable deal?

tvfreek

nubbins wrote: »

How much work actually goes into a normalish no hassle mortgage application. My broker has made around £2200 (from the lenders) from two recent mortgages for myself. I have never met him and most of the communication was through email. I don't begrudge him one penny as he has been priceless but I cannot see how he would have spent more than 10 hours on each application?

The fact you cant' see how he spent more than 10 hours on each application is a lack of education on your part - I'm guessing any broker on here would find 10 hours quite reasonable start to finish.

nubbins

Obviously you've misread my post, thats why I am asking...to educate myself!!

Actually, I mis-read your post, so I am uneducated because I cannot see how 10 hours was spent on 1 application yet you say "10 hours reasonable start to finish", kinda contradicting yourself there.

tvfreek

I can see how a normal case takes 10 hours

You cant.

This was the lack of education I was referring to.

All brokers will work to different fee scales dependant on the type of business they advise on.

I'm a london broker so tend to earn more than those working outside the M25.

kingstreet

Trying to work from a crude hourly rate ignores the fixed costs which have to be paid regardless of the amount of business written and the average case size.

FWIW we did over 200 cases last year and only one produced a commission of more than £1,100 and after two applications the client changed their mind and didn't proceed. Net income to the firm £0. Hours spent, more than ten.

On Saturday I processed a decision in principle for a Leeds BS case, mortgage amount £54,000. Commission £189.

Unfortunately, the larger cases have to subsidise the smaller ones.

nubbins

tvfreek wrote: »

I'm a london broker .

I can tell!!

ACG

A straight forward case can be done in 10 hours.
However most do not fall into that category - even straight forward clients. All it takes is someone with a lack of common sense (which is a commodity in short supply)or a small issue and you can spend hours on admin or the phone. The reality is my clients would never know about those issues as they are paying me to deal with it. Also, if I tell them, they are more likely to be on the phone chasing me so it then takes up more time.

I remember a case recently where it fit criteria (I know as it was a bit iffy and I wanted to check before submitting it). Underwriter declined it for no reason other than he did not like it. I had to argue with the underwriter, a senior underwriting, head of underwriting and then head of risk before getting it accepted. Sadly that is not as 5 minute argument and then being passed up the chain. It involves waiting for calls, calling back, putting a case together and negotiating - well over a week of messing about. That is clearly an exception but I would say in total that took a good 40 hours work.

Added to that we do have costs:
Staff,
Offices,
Travel,
Insurances,
Licenses,
Training,
Compliance,
etc.

£100 an hour would be nice but even a straight forward case it would never work out to be £100 an hour.

EDIT: Just to add, im not getting the violin out and saying poor brokers. I do enjoy my job in the main and earn a decent wage but there is a lot more work than most realise and it can be quite stressful at times.

kingstreet

This thread just goes to show how many people think a mortgage broker's job is to find them a rate which is lower by 0.1% per annum than what they've found.

Most of what we do is based on extensive experience and research into lender criteria to find lenders for the borrowers who don't fit into the proverbial round hole.

The cases that take a couple of hours and are easy go direct to HSBC and YBS in my experience.

amnblog

Loopy28 wrote: »

My broker charges £350. I saw that the cheapest around was £250 and the most expensive was £750.

My broker is also getting nearly £700 from my lender so nearly 1k in total for my mortgage business. Not bad for a couple of 1 hour meetings with me and some other admin work. Perhaps less than 10 hours work in total for 1k....maybe I am in the wrong job.

The broker does of course have costs to pay and also picks up the risk on the advice, so you are probably in the right job.

Loopy28

Gosh I hope I didn't offend any brokers and the comment wasn't meant as serious as it came across.

I do appreciate that there are lots of cases you receive no payment for and the overheads are very high etc.

On a positive note my broker has been brilliant and was worth every penny, even if he was wearing a very expensive suit ;-)

amnblog

I paid 79p for a tin of soup at Tesco today and it only took 500 milliseconds to go through the scanner.

That works out at £5,688 a hour.

Outrageous.

;-)