Moneyback mortgages - ethical?

homer_j_3

I think you missed toonfish's point..

As I understood it, I think he was trying to prove that you guys do not work for nothing either.

You may get some brokers that will arrange a mortgage for no commission in certain circumtances, long standing clients etc.

kevinchapman82

I spend a lot of time explaining to my clients why I am worth what I get paid. If they then go elsewhere to save money, it is because I haven't done my job properly. I believe I am worth every penny I earn because I offer a very high level of service, after sales support, etc. As far as I'm concerned, the broker in this case has not sold his services well enough, hence their client is looking to go elsewhere...

homer_j_3

or the OP would rather save a small amount of money to do the legwork - there are people out there that will do that.

If the OP was paid £10 an hour - I could see easily how a few undred quid would demonstrate as a good saving.

We know that the true cost saving may not be that simply clarified.

toonfish

MBM wrote: »

Toonfish, when you arrange a mortgage with Britannia or HSBC how do you get paid? You say that your mortgages cost your clients nothing from their own pocket, yet as these two lenders do not pay commission how do you make any money?

I don't get paid for the mortgage, I may pick up some insurance but even if I don't I'll generate good will and referalls. We often advise people to stay with the likes of Britannia, Nationwide too even though we earn nothing from it.

Basically we work on a long term, repeat business model, and try to get to know most of our clients well. Some of them just call into the office for a chat when they are in town and I love that.

guppy

If you don't like brokers, just steer clear. If you want to use one, pay the fees and shut up unless they treat you badly.

If you're suggesting deliberately going to see one, wasting their time and money, and then taking their advice without paying for it, then you sound like a rather unpleasant character.

Personally I like to do things for myself. I've no experience of brokers and always try to avoid the middleman. But in my opinion people that do this sort of thing, especially to small traders of any description, are frankly timewasting parasites.

ec9wrr

dunstonh wrote: »

£520 is a pittance. Its one of the reasons I dont personally transact mortgages and leave it to my mortgage adviser. Thats just the gross payment as well. By the time the regulatory costs, office, staff, stationery, network, compliance, software etc has all been paid for you then have a much smaller chunk to then pay your NI and tax on as well.

The above is a very valid point.
However, the bit I don't understand is that the MBM service provide a service broadly similar to that of a normal advisor but importantly WITHOUT advise. In your example, the £260 is really going to the mortgage advisor for the advise only. Afterall, MBM also have to pay regulatory costs, office, staff, stationery, network, compliance, software etc and yet they still make a profit on only £260 gross revenue (in your example).
If the £260 that MBM receive allows profit, then a mortage advisor only needs to charge (and make profit) to reflect the advise they offer.
My opinion is that I'm happy for mortgage advisors to get paid what ever they deserve. The market will dictate this. If mortgage advisors were not making enough profit because customers were switching to MBM then I'm sure there are changes they can make to their business to prevent this happening. If this means introducing charges, then so be it.

dunstonh

However, the bit I don't understand is that the MBM service provide a service broadly similar to that of a normal advisor but importantly WITHOUT advise. In your example, the £260 is really going to the mortgage advisor for the advise only. Afterall, MBM also have to pay regulatory costs, office, staff, stationery, network, compliance, software etc and yet they still make a profit on only £260 gross revenue (in your example).

They wont be using mortgage advisers to deal with the paperwork. They will be using cheaper staff. Plus, the timescale is quicker. They wont have 2-3 appointments a day of an hour each where people are in to get figures and not purchase a mortgage. They also wont be doing home visits and evening calls. Their PI costs will be lower as execution only doesnt include advice. A lot of the work is passed back to the individual and not done by the mortgage adviser. Time is probably the biggest cost here. Although I have a £5000 plus VAT to pay this month for software that I wouldnt need if I only did execution only. Indeed, if I only did execution only, I could reduce my costs by about £15,000 a year.

Also, a lot of mortgage brokers are employees or attached to existing firms where they only get a certain percentage of the commission. For example, a firm in my town uses the popular model where they only get 30% of the commission with 70% going to the owners on shop generated appointments and the reverse where they get 70% on their own clients. That doesnt give them the scope to discount.

MortgageMamma

I dont see why brokers should discount on full advice sales no matter what the procuration fee. if it was coming out of the clients pocket then fair enough but it comes out of the lenders pocket. I dont see why brokers should have to justify their procuration fee's to every tom !!!!!! and harry. If a client cant handle the fact we get paid about £300 for every £100,000 they lend then thats their problem and personally I wouldnt want them as clients.

Any broker knows deep down if they are any good or not. you only have to think about the trail of happy clients, thank you cards, gifts, letters etc that you have to know that people appreciate the expertise you have and the help you have given them. Its been proven now that over 66% of the british population use a mortgage broker for their transaction, so I think direct sales and internet companies who give cashback have their days numbered. There will always be the ill informed who "trust" their banks and building societies and the consumers who view non reciprocated loyalty to an organisation above saving money, but as time goes by they will dwindle. There will always be the kind who go to MBM, but unless they are lucky on day when their mortgage turns out unsuitable they will be bit on the backside and left to sort out their mess. 66% use brokers. They cannot all be hopeless at maths.

dwsjarcmcd

I have to disagree with MM that these types of sites have had their day, indeed I'm not sure that the 66% doesn't include the MBM's of this world. I think this is a very uninformed comment without a clue as to how much business these sites do (as indeed I don't). The reality is, whether you consider the OP's stance (or question in reaility) unethical, human nature says in many cases that s/he will pocket the cashback. Brokers are going to have to compete with this, one way or another, particularly if a major player starts this type of activity with much bigger marketing spend and brand awareness than MBM has.

I do find the various comments along the lines of calling people who arrange their own mortgages as 'uninformed' rather silly and the asertion that those who either arrange their own mortgages or do so via an execution only site mostly getting unsuitable mortgages just plain daft.

MortgageMamma

dwsjarcmcd wrote: »

I have to disagree with MM that these types of sites have had their day, indeed I'm not sure that the 66% doesn't include the MBM's of this world.


MBM are not mortgage brokers, they do not give advice.

I think this is a very uninformed comment without a clue as to how much business these sites do (as indeed I don't).

Its not ill-informed, the figures I quoted were from the Council of Mortgage Lenders - people who took the ADVICE of a broker and then transacted the business

The reality is, whether you consider the OP's stance (or question in reaility) unethical, human nature says in many cases that s/he will pocket the cashback.

That depends on the persons priorities. get it right or get some cash.

Brokers are going to have to compete with this, one way or another, particularly if a major player starts this type of activity with much bigger marketing spend and brand awareness than MBM has.

I can't argue with that, but I will say that the standard of financially literacy in this country is very poor, and from experience a lot of the british public enter into financial contracts without knowing the terms. it is that same British public that complains when they "didnt know" about a clause in a contract that is causing them problems.

I do find the various comments along the lines of calling people who arrange their own mortgages as 'uninformed' rather silly and the asertion that those who either arrange their own mortgages or do so via an execution only site mostly getting unsuitable mortgages just plain daft.

I don't see anywhere in that statement where I said all the people who used companies such as MBM being uniformed - and I'm sorry theres nowhere I can pull stats from to back that one up, but I am convinced many people who use that site, probably the majority are uninformed

There will always be a place for brokers in this market. The UK property market and financial sector is one of the most complex in the world. I'd start worrying if I felt MBM and similar sites could provide the level of detailed information on lending critierias, and was able to find a solution to a complex problems like a mortgage broker can. Consumers need the personal touch and a recent survey in a mortgage publication indicated not many people were willing to buy a mortgage online with being advised, as its such a large commitment