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The cost in time and stress

I am indebted to 'addedvaluebob' this morning for kicking my cage with his posts on another thread around the use of mortgage brokers.


Bob says...


'You paid a broker to do something you could do yourself and cost you £350. I thought this forum was about moneysaving but this thread seems to be more about mortgage brokers supporting the idea of paying money to mortgage brokers.'


and


'The cost in 'time and stress' is just a myth put out by the financial services industry to support the idea of paying them for something you can do yourself'


None here will be surprised to hear that I do not share his views.


Our market is no different from many - consumers have options


1. Buy a product direct (direct to Lender)


2. Buy through a specialist who makes their profit on the product sale (fee free Broker service)


3. Buy through a specialist who charges for a specific service (fee charged broker service)

One key difference however is that, with regard to mortgages, the manufacturer decides who they will sell to.


I am trying to think of a similar product outside of financial services but nothing comes to mind.


Analogy

Let's imagine that you wanted to buy a TV and thought that Sony offered the right product at the right price.


You go to Amazon and they sell you one. You have it delivered and you unbox it and set it up. It is fine and it does the job.


Happy days.

Your neighbour wants a new TV and goes to John Lewis. He is advised that the Panasonic is the better model for his circumstances, he buys the TV and John Lewis bring it round and set it up at home for him.

The next neighbour went on to Amazon in order to buy the Sony TV but Sony won't sell him one because they found out about a row he had with Electrolux over a washing machine 2 years ago.

He still needs a TV and goes to his High Street. He tells his indepedent retailer that Sony wont let him have a TV so can he please buy a Panasonic like his neighbour?


He is told there is no point putting in an order for a Panasonic because they wont sell him a TV either due to the Electrolux issue.


The independent tells him that they can get him a TV from Samsung. It costs £20 more than the Sony model and they will need to charge him £50 to deliver it and set it up.

All three neighbours now have a TV.


Neighbour one has a TV he selected himself that he is happy with (of course, he does not know if there is a more suitable model on the market).


Neighbour two has the perfect TV for his needs and got home from work to find it all set up and programmed in his living room.


Neighbour three has a quality TV that does the job for him one he would not have sorted out on his own.


Which neighbour sounds like you?
I am a Mortgage Broker

You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

Comments

  • pinkteapot
    pinkteapot Posts: 8,044 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Personally, I think the decision of whether to use a broker or not entirely depends on the individual and the circumstances.

    If you have a good understanding of mortgages and financial products, and you're an easy case (no credit history problems, long-term permanent jobs, low LTV), there's no reason at all not to apply direct, though it's always worth having a quick chat with a broker to make sure they can't better the rate you've found yourself.

    I've applied for mortgages both with and without brokers.

    Without when we both had permanent jobs and wanted a 40% LTV at 1.2 times our joint salary. HSBC were cheapest and a broker we spoke to couldn't match their rate, let alone beat it. The application took half an hour by phone.

    With when I was in a contract job which meant my salary wouldn't be considered by most lenders, and we hadn't realised that until after our offer was accepted and we needed to do the mortgage application ASAP. I didn't have time to ring round lenders myself and find one, so we used a broker. Their value was in finding a product when we were a tricky case.
  • NW_London
    NW_London Posts: 48 Forumite
    Part of the Furniture Combo Breaker
    I've used a broker for three mortgages and one I went direct. What I've learnt is not all brokers are created equal and a good broker is worth their weight in gold.

    I'm currently going through a BTL remortgage and its a bit of a tricky situation and two mortgage brokers failed to find a lender. The third has not only found a lender but the service received from her so far has been very impressive. I have another BTL remortgage and possibly a new residential mortgage which I could go direct to lender with as they are simple applications but I will use the broker. Yes it's costing me but for me it's worth it.
  • Of course it's up to the individual. But if you feel you don't know much about mortgages then I think a better way to proceed would be to read a bit about them yourself. There is a lot of good material on the internet and you can do it at your leisure, make notes, revisit the day later etc. Or you can also see a mortgage advisor at a bank for free who can explain various mortgages to you (from that bank only). You can then apply at that bank or use online comparison tables and look for a better deal elsewhere. As it was mentioned already, brokers do not always have the best deals.

    Yes, it may cost you some time but for me the stress of not knowing what I'm really signing up for would be far greater!
  • prosaver
    prosaver Posts: 7,026 Forumite
    Part of the Furniture Combo Breaker
    Like the example of the purchase of tv....
    how do you know your getting a good broker?
    “Life isn't about finding yourself. Life is about creating yourself.”
    ― George Bernard Shaw
  • MJP43
    MJP43 Posts: 61 Forumite
    The problem is often not knowing if a broker is any good or not.

    You may be able to go by recommendation but the person who previously had a good experience may have used a broker who is weak with a client with a particular profile.

    There are as many stories on here with folk who have had bad service from a broker as bad service from a lender.
  • jstiff
    jstiff Posts: 57 Forumite
    Eighth Anniversary 10 Posts Combo Breaker
    A broker has been a lifeline for me over the past few months.

    We've had a house fall through which a broker got the mortgage to offer for then vendor pulled out, and another offer (in the post as we speak I hope) on a new build (god I hope this goes through!).

    I am very good at this type of thing, very up with numbers/finances etc (I'm an accountant), I genuinely think I could do this myself. However, I do not have the direct contacts at the banks like a broker does, I do not have full knowledge of the market, e.g. I was unaware of buyer incentives and how different banks treat them or in some cases don't accept them.

    The broker has taken some of the stress from me while I sort everything else out in regards to purchasing a house.

    We went with London & Country, a fee free broker. They have been ok. The one flaw is a slight lack of communication occasionally, If I was to do all this again I would get a paid broker for the added reassurance that they have even more of a vested interest in the application. And I would probably contact brokers on here who I have read many posts from and seen a passion in their work.

    The ONLY time I personally would not use a broker would be if we had a LOT of equity in the house, all our finances had been stable for years, we where well within affordability, NOTHING untoward on all 3 of our credit reports and it was just a remortgage. ANYTHING else it's a broker for me.

    We are spending more than a quarter of a million pounds. I would have no qualms about paying a professional £500-£1,000 to sort this out for me.

    Just my 2p!!
  • Goldiegirl
    Goldiegirl Posts: 8,806 Forumite
    Part of the Furniture 1,000 Posts Rampant Recycler Hung up my suit!
    I will not be applying for another mortgage again - any house move I make in future will be to down size to free up capital.


    However, if I was still a working person, and wanted to apply for a mortgage, I wouldn't use a broker.


    I know that my credit history is squeaky clean, I own my current property outright, so I have stacks of equity, and I have 38 years of working in the banking and finance industry (28 years for a major mortgage lender) so I have the experience and knowledge to find the mortgage product that would suit me.


    I can't see any advantage of using a broker, as most lenders would be queuing up to lend to me.


    In my current situation as a retired person, I'd do the same research, but if I found that some lenders weren't keen to lend to a retired person, I may consider using a broker, to find a lender. But it would have to be a broker that I was happy to work with, and I would still know exactly what I was looking for - I wouldn't be looking for lots of advice.


    But if I was a person who was not financially confident, or there were issues surrounding my credit history, or self employment, then I'd automatically use a broker ( and would probably get saddled with a 'bad' one, as I wouldn't know any better).


    It's horses for courses, and a broker isn't always an essential.


    On the television analogy, I'm none of those people.


    I have never had any arguments with any electrical manufacturer, so I know that all of them would sell to me. I have enough confidence to research the market and work out what is right for me, but I know that I don't have the confidence to set the TV up. So I'd go to John Lewis, buy the TV that I selected, and get them to set it up for me
    Early retired - 18th December 2014
    If your dreams don't scare you, they're not big enough
  • TrickyDicky101
    TrickyDicky101 Posts: 3,534 Forumite
    Part of the Furniture 1,000 Posts
    I have worked in financial services for over 18 years (not within banking/mortgages, however). I am financially astute.

    I have had two mortgages in my life - one transacted through a broker (who obtained his commission from the lender and not via direct fees from me) and one where I went to the lender direct (same lender as via the broker).

    What would drive me to use a broker in future would not be for product selection - as Goldiegirl says, I can do that myself. However, dealing with the mortgage staff at my last and current lender was a total pain - they made errors in the original offer and getting them to correct it was an exercise in itself.

    So were I to use a broker it would be to make my life easy - and it would be worth a few hundred pounds to do so.
  • Paully232000
    Paully232000 Posts: 2,108 Forumite
    I have worked in financial services for over 18 years (not within banking/mortgages, however). I am financially astute.

    I have had two mortgages in my life - one transacted through a broker (who obtained his commission from the lender and not via direct fees from me) and one where I went to the lender direct (same lender as via the broker).

    What would drive me to use a broker in future would not be for product selection - as Goldiegirl says, I can do that myself. However, dealing with the mortgage staff at my last and current lender was a total pain - they made errors in the original offer and getting them to correct it was an exercise in itself.

    So were I to use a broker it would be to make my life easy - and it would be worth a few hundred pounds to do so.

    If i had all the time in the world i would probably do it myself but with a job and two children, I don't want to be spending my spare time looking through mortgages when i can give all my details to a broker on one appointment at my house and let her get on with it and then come back with an offer. £299 fee in the grand scheme of things is nothing in the grand scheme of how much my time is worth.
  • Goldiegirl
    Goldiegirl Posts: 8,806 Forumite
    Part of the Furniture 1,000 Posts Rampant Recycler Hung up my suit!


    However, dealing with the mortgage staff at my last and current lender was a total pain - they made errors in the original offer and getting them to correct it was an exercise in itself.

    .


    Good point.


    I last applied for a mortgage in 1989, when everything was done in branch, and the person processing the mortgage was sitting at the next desk, and the person approving the mortgage was the branch manager, so I could just nip into his office to talk to him.


    It'd be a different kettle of fish today, trying to get hold of the right person to talk to, and also to feel happy with the way they are doing the processing.


    But if I used a broker, it'd still have to be the right one - a person I could work with, rather than one who thought I knew nothing
    Early retired - 18th December 2014
    If your dreams don't scare you, they're not big enough
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