mortgage fee free broker or not?

wang801

Hi,


I have nosing around these forums for the past few weeks trying to get our finances sorted ready for a mortgage application in the new year. Now I notice that some financial advisors charge quite a hefty fee, while others are free (i.e commission only)


Is there an advantage using a paid mortgage broker, or are you just as well off using a fee free broker?


Thanks in advanced

amnblog

Sometimes you get a cheap result in Poundland.


Generally, you get value for money in John Lewis.

dunstonh

Now I notice that some financial advisors charge quite a hefty fee, while others are free (i.e commission only)

Commission is not free.

If you get a mortgage broker that charges £500 and rebates/offsets commission, then that can be cheaper than a broker that keeps that commission but doesnt charge. Plus, the fee only broker will usually consider non-commission paying deals in their research.

The issue is not so much the fee but the size of the fee. You say hefty but give no context.

kingstreet

wang801 wrote: »

Hi,


I have nosing around these forums for the past few weeks trying to get our finances sorted ready for a mortgage application in the new year. Now I notice that some financial advisors charge quite a hefty fee, while others are free (i.e commission only)


Is there an advantage using a paid mortgage broker, or are you just as well off using a fee free broker?


Thanks in advanced

How big is your mortgage going to be?

Typically, a broker is going to get 0.3% of the mortgage amount.

In your case, is that going to be enough to keep them committed, or are you going to end up with service which reflects how much attention your case is going to command?

It's your call, but I haven't once had someone come back to us after completion and suggest our service wasn't worth our £250 fee and the commission we get and that goes for £35,000 shared ownership cases and £250,000 mortgages.

wang801

thank you all for taking the time to reply,


Sorry I forgot to give enough details;


As a first time buyer and looking to use HTB we are looking at a house between 140/160k. A financial advisor we have spoken with up to now charges 1%, which in my opinion is quite high.

ACG

9 times out of 10 I charge a fee. Unless its a large mortgage and straight forward enough I tend to need a fee to make it financially viable.

I do that for 2 reasons:
1) It means I can limit the cases I take on and spend more time on each case and be around to answer questions from clients and lenders.
2) I do not fancy running around like a blue assed fly to earn a decent enough income.

Thats not to say there is anything wrong with fee free, but the only time I did fee free was when I was starting out. I tend to think that a broker with experience and time costs money.

kingstreet

Is this HTB Equity Loan on a newbuild or HTB - Mortgage Guarantee on an older property?

IMHO 1% can be high.

If you are buying on HTB - EL, that means a £160k purchase price, after the min deposit and equity loan is a mortgage of £120,000.

£1,200 fee plus £360 commission.

If on HTB- MG with only 5% deposit, that's £152,000 mortgage, so £1,520 fee and £456 commission.

amnblog

wang801 wrote: »

thank you all for taking the time to reply,


Sorry I forgot to give enough details;


As a first time buyer and looking to use HTB we are looking at a house between 140/160k. A financial advisor we have spoken with up to now charges 1%, which in my opinion is quite high.

So the question was, is 1% too much?


Answer - it depends, if you get what you want perhaps it is good value.


Can you get a lower fee, elsewhere - yes you can.

amnblog

We had telephone enquiry yesterday from someone looking for a £200K BTL mortgage and wanting a broker to split the commission with him.


My colleague suggested we could wait outside his factory and he could give us some of his wages as he came out.

wang801

Thanks again for all your answers, we are not the most straight forward mortgage applicants so I think in our case we are best off using a paid mortgage broker.

ACG

Any broker prepared to split the commission on that has financial problems or is new to the industry.