should whole of market broker charge the client?

muhandis

MoneySavingMission wrote: »

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?

As others have said, it differs from broker to broker. My husband's broker charged him 499 the first time and 250 for remos on the BTL property he owns. Having said that, there were brokers he met that didn't charge any fee to the client. The fee is paid on submission of the application and refundable in case the mortgage doesn't go through.

SavingSteve wrote: »

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.

That doesn't seem right. We got a mortgage on our purchase through a broker a few months ago and our KFI (the summary given at the beginning which contains all the key facts) clearly mentioned the exact amount that the broker firm would get from the lender upon successful completion of the mortgage. Plus the arrangement fee (not charged by all brokers) which we were told of when setting up the appointment. Not sure how they could be any more transparent with the money they stand to make from a deal.

amnblog

Perhaps Steve is referring to the semantics used in advertising.

Example

'We do not charge for our advice'

there is an admin fee of £299 payable when you submit your application

dunstonh

amnblog wrote: »

Perhaps Steve is referring to the semantics used in advertising.

Example

'We do not charge for our advice'

there is an admin fee of £299 payable when you submit your application

To me that would be wrong. There clearly is a fee by the advisory firm.

ACG

Agreed. My compliance would have issues with that all day.

SavingSteve

It is very much in the advertising.

"Fee free" = somewhere in the mortgage illustration it is quoted that I am paid by the lender, including how much. But I don't make it clear to you, you can find it for yourself if you want.

"One off lifetime fee" = I get paid a fee once and want you to think you have a huge bargain on your hands, whereas really what this means is I have you on tap for all the commissions forever, which again are in the KFI, but I'm not going to make them obvious.

"Fixed fee" = Makes it look like the Broker has no incentive to angle you towards a lender that pays higher commission rates, but that is not true, as the fee is fixed but the commission varies based on lender selection.

The last one is most controversial, as no broker will admit to it, and it is difficult to prove. But it clearly a possibility, and if the difference in broker remuneration between different options were made clearer to the borrower it would help towards pushing unscrupulous brokers aside.

In short, there is disclosure (ticking the regulatory box by putting it in the KFI) and then there is the marketing spiel. It is the latter I have issues with.

ACG

Pick 3 lenders at random, I will tell you what I would get paid gross on a £100k Mortgage. Just so you can see how little difference it makes in commission. I could pick 3 lenders but then you would think I had chosen them to try and prove a point.

I would not say it does not happen, but any decent broker is not going to choose a lender based on commission. The difference is so small that its not worth the time it takes to check the different rates of commission.

I go through the KFI with my clients where I meet them face to face. But if you as a buyer are not reading the information on a mortgage you take out, are you interested in what commission gets paid? If you cba to check the rate and fees you are signing up for, why would you be bothered about something that has no effect on you whether or not it is paid?

SavingSteve

Taking the client through the KFI and specifically pointing out the commission is the right thing. Not all Brokers do this and fall back on the "it's in the KFI, they can read it if they're interested" approach.

I take the point on the minimal difference, but just out of intrigue, let's go with The Mortgage Works vs Coventry BS vs HSBC

Glover1862

Hsbc only use L&C as far as I know, all the rest direct only.

I did find my broker particularly keen on Accord, I wonder if they pay a bit more?

kingstreet

I can only speak for ourselves in how we do things.

Our £250 fee is on front page of our website.

If you attempt the mortgage qualification form, terms of business pops up and confirms the £250 fee plus commission from lender.

First thing we do is calculate affordability and issue illustrations.

FWIW the new ESIS introduced in March has the "commission" on the front and not on page four or five of the old KFI. The broker fee is in the fees box on page 3, box 4.

I'm not suggesting some firms will try to hide their costs, but for us it isn't worth it. We're too busy writing business to need to use subterfuge.

kingstreet

You can't use apples and oranges.

It should be BTL lenders, or residential lenders.

Here's a few of each, Residential then BTL;-

0.36% Halifax
0.33% Santander
0.35% Nationwide
0.35% NatWest
0.37% Accord

0.44% BM Solutions
0.44% The Mortgage Works
0.45% NatWest BTL
0.50% Accord BTL
0.50% Santander BTL

These are the full amounts paid via a mortgage club, not what is actually paid to the broker firm.

Frankly, 0.04% on a residential or 0.06% on a BTL just aren't enough to risk a 32 year career over.

FWIW we have never used Accord, so that shows how much more we value our client than we do our pocket, IMHO.