Is a broker needed????

MoneySaverMick

Hi All,

As I like a thursday night drink in my local I got talking to a a regular who I thought already owns a property but turns out he doesn't.

He is currently looking to go onto the Help to Buy scheme, he has found a new build property for around £125k, it is advertised as offers is region of which I'm gathering is the absolute most he'd need to pay.

I always thought you'd pay the advertised price to the builder? Anway think he is going to offer around £120k. On the site there is only 7 plots being built, it's a smaller builder (is registered for the HTB scheme) who has already sold 3 of them. They been on the market around about a month now.

He's looked at the Help to Buy website for info on the whole process, the estate agent who have advertised the property for the builder are trying to get him to use their mortgage advisor - he has been quoted £600 for their services!! I've told him not to do that, their are brokers out there who will do a better job for half the price. But in this case, is it really needed to have a broker or is he best just ringing the Help to Buy agent and doing it all through them? Surely they keep you on track and tell you what is needed through the whole process?

If push comes to shove and a broker is needed, I can get in touch with an old friend who is a broker - he charged me around £200 and had no issues at all.

Let_Us_See

Ah.....another "man the down pub" conversation!:p

Maybe I should have an "open evening" down my local as I must be missing out on loads of business.

amnblog

MoneySaverMick wrote: »

I've told him not to do that, their are brokers out there who will do a better job for half the price.

Time for you to back up that statement - perhaps with your former broker?

kingstreet

As a newbuild specialist we come across a number of people (and other brokers) who think HTB is dependent only on being able to get the mortgage.

The HCA provides a HTB calculator which often means your maximum mortgage (and equity loan) is less than a lender will offer as it cuts out at 4.5 x income, uses a mortgage rate of 4.8% and a debt to household income ratio of 45%.

We complete the affordability calculators for HTB and the lenders so the client knows what is possible before they consider making a reservation at the site.

Once affordability is checked (and lenders take 3% or 4% of the equity loan into account, affecting what you can borrow) we produce illustrations for example products for consideration by the client. Once we have decided between us the right lender for client needs, we then obtain an agreement in principle to prove to the builder the client is able to proceed.

Client reserves. We obtain a reservation from the builder and prepare a draft property information form. Once signed by the client, the two are added together and submitted to the HTB Agent for Authority To Proceed for the HTB equity loan.

We then visit the client to prepare for the submission of the mortgage application and to collect the required documentation. We submit and look after everything right through until completion.

Our charge, £250 plus commission from the lender. Many of our builders pay our fee, so the client pays us nothing.

Only the person requiring the help and advice can determine if we are needed or not.

MoneySaverMick

£600 is excessive in my opinion.

Especially when this appears to be a straightforward(-ish) case -

i.e. well within affordability, meets all the HTB criteria, in long term job, no past issues with credit.

amnblog

Bearing in mind the mortgage is worth about £300 to the broker without a fee I don't see £600 as excessive knowing our costs and risks.

MoneySaverMick

Kingstreet - That is brilliant info.

Looking at your signature I take it, as the house is in the north-east you don't with property up here. That's unfortunate however that has pretty much confirmed to me that if he does decide to use a broker, it should be the estate agents recommended one.

Thank you again

amnblog

MoneySaverMick wrote: »

that has pretty much confirmed to me that if he does decide to use a broker, it should be the estate agents recommended one.

Was that the intended message KS?

ACG

On that size Mortgage I personally do not think £600 is excessive but maybe if I was the one buying I would think differently.

There are 2 help to buy schemes, both sound like they would be an option but both have different pros and cons.

Personally I do not do the equity loan help to buy mortgages (htb1), I know other brokers who do not do them either. Some brokers do specialise so whilst there are many brokers who would be able to do what your friend wants there are different ways and getting a specialist in the field is likely to be better than getting the average broker on the case (whether that be with the developers or your own).

I know of 2 lenders at least who have special htb products only available through certain brokers.

Just to flip that, I specialise in adverse and I know I have access to adverse products that a lot of other brokers do not.

As the saying goes, you get what you pay for.

Just to add... Im not saying your friend should use a broker or go direct. Im just pointing out that not all brokers are equal. Some are good, some are bad (going off the posts on this site) and some specialise which means they know their stuff on that particular field far better than any average broker will.

MoneySaverMick

That should read 'shouldn't be'.

He should search around for another broker rather than just accept the advisor they have offered.

kingstreet

The last time I had a "broker" respond "What?" to my question "Have you done the HTB calculator, as that has a lower output than the lender's?" it was someone who worked in an estate agency who charged more than we do, yet knew nothing about newbuild.

Will there be any newbuild cash incentives, such as stamp duty paid? Some lenders accept £0 on HTB, while others accept upto 5% of the purchase price. Very embarrassing if the valuation is done and it's £5,000 lower because the incentives have been deducted and the buyer doesn't have the cash to pay the SDLT bill.

No amn, it wasn't. Nothing on God's earth would leave me suggesting an EA advisor is the best solution to anything, other than relieving you of large quantities of cash on "lifetime broker fees," solicitor introductions which earn them another commission as the client pays more and tied insurance products far more expensive than an IFA can obtain with the same provider for the same contract.