Mortgage Broker Fee

bertiewhite

For context, I paid my broker £250 on application and will pay her another £250 on completion.

I'd say she has been worth every penny, considering the difficulty I've had dealing with mortgage companies in the past because of the nature of my job.

haras_nosirrah

I think people also need to realise that not all cases are of equal size

I also charge £399 on full mortgage offer. Some cases I will get lender commission of around 5-600 (before all the extras are taken off - in reality I get about 59% of it once everyone has taken their cut and that is before tax) - i think the lowest lender commission I got was £45 for a case so I personally got about £29 before tax from the lender. I charge everyone the same fee so the bigger ones balance out the small ones.

butterflybook

The broker will not receive all of the £700 which is on the documentation there, many brokers will charge a client a fee to cover the admin costs associated, the broker wont see any of the £700 until the remortgage completes which is generally a few months down the line.

The above figures seems fair and reasonable to me.

amnblog

butterflybook wrote: »

The above figures seems fair and reasonable to me.

That won't stop many thinking we should work 'for free' Butterfly

payless

minimike2 wrote: »

Like others have said, the broker doesn't see all of that money.

You would be suprised the amount that gets swallowed up. There is a horrible stigma attached to the word "commission" in this country and brokers often feel the brunt. When it comes to financial products everyone wants something for nothing. It's like they don't expect brokers to actually get paid for going to work.

Your post is a great example of that and not actually understanding the way brokers are paid. Like others have said, take out all the regulatory costs, insurance and other overheads, then take off tax and national insurance. There isn't a huge amount left for what probably takes 8-12 hours work.

In many other financial advice situations the commission concept has stopped.- it can not be discounted as part of the advice process, hence why it is declared.

Mike, sorry but your post is a great example of not understanding that some of us have an acute understanding of the way brokers are paid and the costs of running a business.

Just to qualify that statement, the first mortgage I arranged was in 1987 , been in industry ( employed, compliance, trainer, or own business) until gave up my ( direct authorisation) FCA mortgage permissions in this year

nomorekids

I am so lucky then, because our mortgage broker has always worked commission only for us, our kids and friends also.

Just saying commission only brokers do exist, would never fault the service either.

dunstonh

nomorekids wrote: »

I am so lucky then, because our mortgage broker has always worked commission only for us, our kids and friends also.

Just saying commission only brokers do exist, would never fault the service either.

You typically find that brokers living/working in areas of high property values tend to be able to waive an advice charge as the commissions are usually far higher. Indeed, in those areas, you are often better off going fee only basis with a commission rebate on the excess over the fee.

For example, a £600k mortgage could pay around £2000 commission. Go with a £1000 fee and you get £1000 rebated from the £2000 commission.

Whereas in an area of low house prices, and low mortgages, the commissions are just too low to operate without the fee. £60k mortgage being around £200.

minimike2

payless wrote: »

In many other financial advice situations the commission concept has stopped.- it can not be discounted as part of the advice process, hence why it is declared.

Mike, sorry but your post is a great example of not understanding that some of us have an acute understanding of the way brokers are paid and the costs of running a business.

Just to qualify that statement, the first mortgage I arranged was in 1987 , been in industry ( employed, compliance, trainer, or own business) until gave up my ( direct authorisation) FCA mortgage permissions in this year

Yes and look what happened to financial advice for the masses when the model was changed. It virtually vanished from the banks and has done down the route of execution only services for all but those who have 4 figures to spend on advice, which the mass of the retail population won't pay.

Are you saying then that you think a broker charging a fee of £399 should then be refunding the commission to the customer? OR not getting it at all?

I can tell you now, that broker would be out of business pretty fast.

payless

I agree that (unfortunately) the commission system distribution method seems to workforce most players in the mortgage market.

The OP questioned if that was a lot, so in this case the consumer wasn’t overly comfortable / question VFM with combined commission and a fee - at this level.

What we saw is a number of brokers suggesting it was reasonable / the commission costs consumer nothing so have to pay on top.

There are a number of brokers that for a straightforward case would not charge an additional fee or offered a true fee based model at less than 1099 ( commission refunded).

haras_nosirrah

I charge everyone the same regardless otherwise it is almost saying that the richer you are the less you have to pay. I specialise in shared ownership so most of my cases are small. To make those cases work on their own I would need to charge a much higher fee. The odd larger mortgage (usually staircasers or those going to the open market) enables me to keep my fees across the board lower. It have 8 cases going through at the moment where the lender commission is under £200 (the current lowest being £152 so about £90 to me pre tax). I would have to charge these clients a lot more than the £399 fee we charge to make this work and it would be a barrier to advice. At the same time I also have 6 cases going through where the commission is over £1000 (so I get about £590) these balance out the smaller ones and enable me to give those smaller mortgages advice rather than turning them away as they still take up a lot of time and being shared ownership are complex. The vast majority of cases I do are lender commission around the 3-400 mark so around £200 to me pre tax. I think people think we get a lot more commission than we do.