should whole of market broker charge the client?

MoneySavingMission

for btl mortgage in the past, the mortgage brokers received commission from the lender.

Has this now changed? I've been told I would need to pay a completion fee of £395 to the broker. Is this normal?

ACG

Every broker is different.
There is a lot of work involved, 10-15 hours assuming nothing goes wrong.

I would give up the job if I had to work fee free. The work and stress invovled is not worth what I receive as an average in commission.

MoneySavingMission

thanks ACG. I just want to check this is fair and normal (as i've not paid this in the past for arranging btl mortgages)

is the amount fair?

So i'll have a broker completion fee, product fee (paid to the lender) and legal fees inc land reg? Is there anything else i've not considered?

ACG

Its hard to say without knowing more, but it does not seem excessive. Generally I see fees from around £500-1000. There are exceptions, £0, £250 right through to thousands in broker fees. Your only paying on completion so you know your only outlaying based on results.

Valuation fee? Apart from that I think you have crossed the other fees off.

dunstonh

for btl mortgage in the past, the mortgage brokers received commission from the lender.

Has this now changed? I've been told I would need to pay a completion fee of £395 to the broker. Is this normal?

Depends on the area. Where houses, particularly BTL are £100k and mortgages are say £60k, the the commission wont be enough. So, iuts very common for brokers to make a charge.

If you are in an area where you can add a zero to those lending figures then there is no need to charge.

is the amount fair?

It is more than our charge but I have seen higher. I would put it in the fair ballpark.

amnblog

The broker needs to be paid by the client for the advice and the service provided.

The 'commission' is what the industry calls a procuration fee and is paid by the Lender to the broker to cover the 'management' of the case. This includes, identifying the client, lending requirement, and property as suitable for the Lender and submitting the application in a form that enables the Lender to make a swift and positive decision with little work their end.

Hence the use of the word procuration, not commission which is payment for a sale made.

SavingSteve

Personally I dislike the lack of transparency. I do not question that a broker should be paid, but it should all be way more transparent than it is. Use of terms like 'fee free', whilst factually accurate are a bit misleading.

I'd much prefer it if a Broker laid out clearly their total remuneration and how much of that the borrower pays directly to the Broker.

This is an issue across all such industries, IMHO, i.e. Insurance Brokers, not just limited to Mortgage intermediaries.

Just my opinion on the matter.

kingstreet

Our terms of business given at the outset sets out whether a broker fee will be payable and it's £250 or nothing.

Every illustration quotes the exact procuration fee we will be paid by a lender.

I don't see how we could be more transparent, Steve...?

dunstonh

I'd much prefer it if a Broker laid out clearly their total remuneration and how much of that the borrower pays directly to the Broker.

They do. It is fully disclosed

MortgageMamma

SavingSteve


It is required that we disclose our fees at the first meeting verbally and you are also given a client agreement and Initial Disclosure Document to evidence the fees.


I don't know which broker you've been using but if they have not done things by the book give them a wide berth next time.

ACG

When was the last time you used a broker?

When I speak to a client, I discuss my fees before even meeting them. Whats the point in meeting up if they do not want to pay the fee? It is a waste of everyones time.

My terms of business states 3 different fees and who is liable for what fee. It also states I get commission from the lender. I email this over before meeting up and go through it once we meet.

The applicant then gets a copy of the KFI/ESIS/Illustration - on there it confirms the commission and ALL fees charged by the lender and broker. The appliant then receives a copy of the mortgage offer which confirms the fees and commission again.

The only way the client could complete let alone get past the first meeting is to not listen or read.