Mortgage Broker Fees

rosieraspberry

I am looking at buying a bigger property and need a new mortgage. I have not found a property yet.
I saw a broker last week and he was able to find us rates of around 1.9% fixed for 5 years which I am pleased with but he charges a broker fee of £300.
Since saving so hard for this house deposit you'll never meet a more tight-fisted woman than myself and I wondered if it's worth finding a broker that doesn't charge but gets bank commission instead? I'm guessing they'll still have access to great rates!
If anyone has any other tips or advice on keeping the solicitor's fees/ products fees etc. to a minimum they'd be much appreciated!

ACG

The broker will receive commission as well as the fee.

Obviously I am biased, but I will explain why...
When I started out as a broker 5 years ago, I was fee free. I had to run around like a headless chicken in order to earn a wage. I then started to charge fees and it meant I was able to spend more time per customer. If there is a problem, I have less work on my plate so I can be around to fix the issue.

I know your first thoughts will be - well I am straight forward, there will be no problems... easy said, but even the most straight forward of cases can have problems.

£300 is a small price to pay on what will probably be one of your most expensive purchases if it means you have a broker who will be around to ensure it sails through or picks up any problems sharpish. There is a thread on here quite recent where the person has said it takes their broker days to reply - that is the exception obviously, but my money would be on them being fee free and struggling to cope.

Our fees typically start at £500. There are exceptions - ie large Mortgage (because their is more commission), existing customers etc but £300 is not a huge broker fee, although it is not my money. I bet you are paying the agent more than that and they do little more than put it on rightmove and check their DIP/ID - all of which you can do.

rosieraspberry

Thanks for your reply.
I, of course, am paying my estate agent a lot more than that and agree they do next to nothing. We shopped around for estate agents and all 3 we had out didn't give us a valuation - they asked what we wanted for our house and agreed that was what it was worth (annoyed with myself for letting them do that)! Our chosen estate agent then rang us after 3 months persuading us to drop the price to encourage a sale!
I have a lot more respect for brokers and would rather they got that money than estate agents, but I'm still not convinced this is something I shouldn't get for free since the option is there.
I don't know what type of problems could arise? The broker finds us a deal with a bank and when we sign up the broker gets commission and we get a rate we're happy with.

dunstonh

I saw a broker last week and he was able to find us rates of around 1.9% fixed for 5 years which I am pleased with but he charges a broker fee of £300.

£300 is in the ballpark.

Since saving so hard for this house deposit you'll never meet a more tight-fisted woman than myself and I wondered if it's worth finding a broker that doesn't charge but gets bank commission instead? I'm guessing they'll still have access to great rates!

A commission is received either way. (unless you do fee with commission offset/rebate).

Typically, in areas of low house prices, the commission is too low for brokers not to have a fee. Whereas in high price areas (mainly cities and home counties etc) the commission is high enough that a fee is not required.

If you are in a high price area then you should be looking for fee free. If you are in a low price area, then expect a small fee.

Indeed, if you are in a high price area, then you should go fee basis with commission offset/refund. Not as many firms offer that and the fee may well be around the £1000 mark. However, the commission rebate could be greater than the fee.

but I'm still not convinced this is something I shouldn't get for free since the option is there.

This site has a list of some of the factory line services that are fees free. The forum posts suggest that things are fine if everything is simple and you are not pushing limits. The problems seem to occur when something goes wrong and the person you spoke to initially has handed you over to the back office who dont have ownership of the case and lack experience and knowledge. Or if you are pushing lending limits and the work required means they are not going to hit their target on the number of people they need to go through each day.

ACG

rosieraspberry wrote: »

I don't know what type of problems could arise? The broker finds us a deal with a bank and when we sign up the broker gets commission and we get a rate we're happy with.

This forum is full of people who have had problems.

If it was a case of:
Find a Mortgage,
Apply for a Mortgage,
Get Mortgage

I would honestly quit my job as I would see no benefit in what our job entails. (This is not a dig at you) Any idiot can find the cheapest rate, you do not need a broker for that.

Straight forward case - declined.
Less of a straight forward case with a slow broker.
DIP Accept - application declined.
Nationwide Fiasco - A broker would deal with all of this on behalf of the customer.

That was just a quick search. All different problems, most of them on the face of it, simple cases. Some do not show the broker in a good light, I have no idea whether or not they are fee free brokers, but the point is that if there is a problem you are going to regret having a broker who is not around/not experienced/not very good.

cjv

If you really do not want to pay the fee then I'm sure if you take some time to look around, you will find a local reputable broker that does not charge one.

I was actually fully expecting to pay a fee and would be happy to do so, but last week I walked in to a local independent Estate Agent that I researched online and had a quick chat with their broker. I asked if they cover the whole of the market etc. and I asked about his fee, he said it was free! or also gave the option of paying 1% of the loan and getting a rebate on the lenders commission.

I was very happy to tick "find a broker" off of my list of things to do, now I am just waiting, impatiently for the property to launch.

If you can save money while still getting a good service, then go for it. Every penny helps!

Edit: From my shopping around £300 seems reasonable as a fee, most I found were between £295-£495

avacapri

on the solicitors fees, shop around is the only advice but a word of caution if you are using price as your only factor for instructing be careful it may be very short-sighted
it does depend on where you live - London tends to be more expensive than outside of London - no reason why you cannot instruct a firm in Leeds to do your conveyancing for a property in London.
shop around - get local and national quotes - speak to the solicitors to make sure you are comfortable with instructing them.

Check the quote looking for any additional fees

https://www.solicitors.com/understanding-conveyancing-quotes.html may help.