First mortgage - Broker vs moneysupermarket deals

andypa1

Hi guys,

I've just put in my first offer on a 2 bed flat, all very exciting!

I have used the services of a mortgage advisor and they have been very helpful in searching for deals for me.
I'm at 84% LTV so should be getting half decent rates.

The broker has found me: 2 year fixed with a rate of 2.39% for the first two years, they will then call me and remortgage for another cheap fix. There are fees of £399 for arrangement and cashback of £500. This equates to: £11059 for two years of lending

Seeing that they will be taking a decent commission from the lender I'm surprised that I can't get rates that are as good as this using my own research. I'm using the moneysupermarket tool as I don't know of any others and that arranges deals based on the interest rate and not inclusive of fees.

The best deal I've found on there is Loughborough which comes to £10967.96 over two years.

If brokers are taking hundreds in commission, why is it so hard for me to find a deal directly with a lender that offers me the commission or cashback?

Would anyone recommend using multiple mortgage advisors to get the best deal?

I'd appreciate any advice you can offer as I'm very new to the world of house purchases!

Cheers,
Andy

amnblog

Lenders have cost to get a product to market whether they 'sell' it themselves or pay a broker to do so.

The Web supermarkets only list product on which they get paid anyway.

The difference with the broker is that they are only considered products for which you are eligible - filtering out the others.

You only need one broker as any independent is already considering the whole of the market for you.

andypa1

Thank you that's really helpful.

Probably a question for the buying a house forum, but is there any harm in calling the estate agent to see what the response of the vendor was tonight?

andypa1

You're right, my broker has been super so far and I have no reason to believe they won't continue to be.
For this reason I'm going to continue to use the broker throughout the process..

My original question though was based upon experiences of being very successful at finding a great deal, whether it be insurance, utility etc and assumed that this financial product would be no different.

I just wondered why brokers have access to better rates than customers going direct but that has been answered for me now. Thank you both!

kingstreet

We typically get 0.3% to 0.35% of the mortgage amount in commission.

We find the client, give advice, enter their details on the lender system and gather the necessary supporting documents.

On £100,000 mortgage, that costs the lender £300 to £350.

We are far cheaper than the lender would pay to do all that themselves, and that's why brokers now have almost 70% of the mortgage market.

Cutting out the broker doesn't mean the lender has a spare 0.3% to give to you as the cost of procuring and administering the business is higher.

amnblog

Not to mention the cost of the risk on the advice KS.


It's a bit baffling we let them get away with paying us 0.3%

kingstreet

amnblog wrote: »

Not to mention the cost of the risk on the advice KS.

It's a bit baffling we let them get away with paying us 0.3%

Tru dat, my bro.

amnblog

We should do-ordinate a lender boycott, one at at time until they all pay 0.5%