Using a broker or applying direct?

martyp

Hi all,

I made a call to London and Country and they seemed great but what I wondered is if you might get better deals going direct to providers if the broker relies on the new mortgage provider for their fees as such?
Could they even get better deals than what's advertised to the public by the mortgage providers?

cahillg81

Brokers will have exclusive deals, some brokers are on a panel of lenders, some are whole of market. Not everyone needs a broker, but you can look on here daily and see people asking questions that they wouldn't have to if they trusted a professional to do the work. Also remember it's not always about the rate.

There is a skill in selecting the right lender. There will be lots of brokers who recommend on total cost - which is probably the best thing - but they might not think of other reasons for using a particular lender.

I see people in my own office who get frustrated with applications or lenders but it's mostly due to them using the wrong lender for certain circumstances.

ACG

There is no definitive answer. Sometimes brokers have better deals, sometimes lenders have better deals, but most of the time we have the same.

If a broker submits your case, the lender does not have to pay for their own advisor or have the insurance in place to cover the mortgage - so the commission they pay us, covers that side of the mortgage.

Lenders at the minute seem to prefer the idea of business coming from brokers, which means if anyone is going to have a better deal, it is more likely to be a broker rather than going direct. But there is nothing stopping you looking at both and comparing the options.

martyp

Excellent, many thanks both. I wasn't sure if the 'commission' element of using a broker might have affected the rates available but can see how it balances out now.
I got my mortgage originally through an IFA but switched to a different deal direct with the mortgage provider a couple of years.

Bomopu

I'd just like to add a question to this thread...


I got a mortgage offer through a broker but the illustration shows their fee to be £2000. Now they have found a mortgage that suits me, couldn't I just go direct to the bank and get the same deal and avoid the broker's fees?

ACG

Depends. They may have asked you to sign a fee agreement, in which case you could find yourself infront of a judge.

Morally, its pretty low. How would you feel if at the end of the month your boss said he did not need you so hes not paying you?

martyp

I must admit I'm a little disappointed with the end result as basically I've been advised the best deal was the rate I would have got had I just gone back to my existing provider as it's staying with them too. I was hoping to get a 1.x% rate
Seems really unfair as I'm being penalised for a lower income. My mortgage isn't exactly huge, it's actually currently 3 times my current income but having gone direct to HSBC who are offering the lowest rate without fees they have advised the most they can offer me is about twice my income and would need to pay about £11k off the mortgage to get with them which I can't possibly do.
Just seems a bit backwards in some respects that on a lower income I can't get a lower interest mortgage which would reduce my monthly payments and make them more affordable? (Bit like car insurance - those who are unemployed pay much more when they can't afford to).
I'm a bit gutted really as my best rate for a 2 year fix was suggested at 1.8% until my income was taken into account and now I'm keeping my fingers crossed for 2.29% or even 2.69% might be the end result.
Seems unfair as I've never ever missed a payment, my credit history is better than average for the UK and my area. I even have savings to fall back on and even being unemployed for about 9 months I had no issues and have support from my father for hard times too. My outgoings are minimal as well with about £500 left over each month after paying all my essential bills/mortgage etc. and that's with a £50 monthly overpayment.

I did calculations on mortgages with and without fees and at 1.69% over 2 years with no fees I'd save £624 over two years over my existing payments. On that basis I didn't really consider those with fees over £500 as I feel it would outweigh the benefit of the lower payments having it added to the capital.

csgohan4

Lenders work on risk, the riskier you are, lower deposit, lower income, more debt, the riskier you are and therefore higher interest is charged as they are taking on this risk.

In regards to mortgage payments, your supposed to pay them, you will get no reward or sympathy for doing so, I don't expect any either.

I also wouldn't mind a 1.x% interest rate, but my ltv is not <60%, that's life, their money their rules.

In addition you have chosen one if the most strictest lenders to go direct with your circumstances.

kingstreet

The OP has now started a thread on shared ownership which (assuming the two issues are related) makes much of this thread redundant, as there is a far smaller appetite for shared ownership at any loan to value than for "normal" business.

We really need a "one case, one thread" rule on here, so we get the full picture.

martyp

kingstreet wrote: »

The OP has now started a thread on shared ownership which (assuming the two issues are related) makes much of this thread redundant, as there is a far smaller appetite for shared ownership at any loan to value than for "normal" business.

We really need a "one case, one thread" rule on here, so we get the full picture.

Sorry yes, I did consider just adding that to this thread but thought it was a different question that might be useful to people that had the same query when searching.
I think my options have been very much limited by the whole shared ownership situation, I believe it's mostly just the big lenders that'll do it (Santander, Barclays, HSBC etc.). I didn't realise HSBC were known for their strict lending policies, I did indicate my income was low when I started speaking to the adviser and he didn't seem to think it was an issue until about 20 minutes into asking lots of questions.