Mortgage broker feedback

dunstonh

Avoid this type of charging at all cost. Its a rip off to get lots of money now and then the company close up in 5 years time and sell their books and you have paid a fee for life with no company to service it.

Also, the business plan is unsustainable. If they were to stay open, what income would they get in 5-10 years time when they are too busy dealing with all their previous clients and not able to service new ones? Or perhaps they will focus on new ones and let existing ones fester away.

I expect to see factory gate pricing on mortgages in 10 years time anyway (to match the way the investment, pensions and life business is going) so paying now for a model which is unsustainable in the long term is wasteful.

payless

Retired_I.F.A. wrote: »

The law used to say a fee no more than £25 could be charged by a broker but I dont know if it still applies.

that was prior to 2004, and in fact even then they could charge more, it was just £25 was max if deal did not proceed. It was a condition of the CCA

Since then the regulation of mortgages moved over from Mortgage Code/ CCA to FSA although its still deemed brokers need a CCA licence

Dan_Collins_2

Also I seem to remember anything over £250 has to be declared. £250 was the max to be paid upfront but not charging fees my brain seems to have gone blank on that one.

The company that are charging that fee are very expensive. I cant say if they are ripping you off as we dont know what they offer. However £3000 or 1.95% then the commission every time the remortgage you?!?

Retainer fees and such like are ok but I think more suited to an IFA that deals with your finances on a more regular basis.

I would kick them in to touch and find a WoM broker. If its a simple remortgage with no hitch you may even be able to do it your self!

homer_j_3

its just a KFI requirement - if less than £250 you do not have to be exact about the amount being received and just that its less than £250. Over this amount, you have to declare accurately..

me2

I would suggest you read this as it has a section on brokers / fees

http://www.moneysavingexpert.com/mortgages/best-mortgages-cashback


From a personal viewpoint I have remortgaged twice in the past few years using Payless (a fee-free broker who contributes to these forums) and found the whole thing very straightforward and cost effective

Payless offered me an advisory service and a small commission rebate which compared very well to the cashback brokers that Martin mentions in his article

I ended up with the most appropriate mortgage for my circumstances and did not pay a brokers fee as he received commission from the lenders.

homer_j_3

I think Martin has looked at the independent bit from the complete wrong angle.

Paying a fee and having commission rebate isn't always more expensive than fee free.

Of course it does depend on the fee charges 1% to me would be extortionate for my operating costs and business model but commissions at 0.35% are the bottom of the scale and it can be considerably more for specialist mortgages.

The whole point of independence is to ensure commission hungry brokers do not go with the better paying commission lenders over the worse paying ones.

You will never know this has happened because it can be justified to why the better paying lender will be better than the poorer one. However - I would say that brokers that operate this way fee free are in the minority but it is plausible for it to happen.

So Martin, correct with fee charging, commission collecting brokers. Avoid like the plague. Independent status could be better than fee free, depending in the fee and the amount you are borrowing. The independent status isn't a smokescreen as you suggest, although your example supports it. Had that broker charged a flat fee £ wise rather than % wise, it may not have supported your argument as well.

Dan_Collins_2

Well I am begining to wonder how clever Martin really is!

No such thing as fee free really, we still have to offer a fee option to use the title independant. If (I dont but you never know in the future, its a changing market) I ever charged a fee I would also keep the commission. I dont get the rebate system, makes no sence to me. You cant charge them up-front!

homer_j_3

it makes perfect sense if you look at the reason for independent status.

You give the commission back to say" look I dont care what they pay me because I get a flat fee for my advice and the flat fee pays me for my time and work"

When you charge a fee and collect the commission aswell, it says " look, i charge a fee and could still be swayed by commission as I am getting that too"

10 times out of 10 I would like to think that if the same adviser with the same client was to give the advice in both operating capacities the product and lender would be the same every time.

However, it is plausible to think that there will be money hungry brokers out there that might just try and squeeze a bit more commission from their clients without adversely affecting them on the mortgage too much. This might bring it down to 7/8/9 times out of 10

dunstonh

The FSA RDR proposals (for investment advisers) appear to be heading down the route that you will only be able to use "independent" if you agree the remuneration upfront. Commission can offset that fee with any shortfall being paid by the client and any surplus being used to rebate to the client or reduce product charges.

I think that is a totally fair option as you can price your cost of advice as being the same regardless of lender and the commission that is rebated can then become a reason why one provider comes better than another. i.e. Lender 1 will pay £350 towards your advice fee but lender 2 will not. Thefore the cost of the mortgage over the 5 years will be £xyz

Dan_Collins_2

homer_j wrote: »

it makes perfect sense if you look at the reason for independent status.

You give the commission back to say" look I dont care what they pay me because I get a flat fee for my advice and the flat fee pays me for my time and work"

When you charge a fee and collect the commission aswell, it says " look, i charge a fee and could still be swayed by commission as I am getting that too"

10 times out of 10 I would like to think that if the same adviser with the same client was to give the advice in both operating capacities the product and lender would be the same every time.

However, it is plausible to think that there will be money hungry brokers out there that might just try and squeeze a bit more commission from their clients without adversely affecting them on the mortgage too much. This might bring it down to 7/8/9 times out of 10

I think I struggle with it because I have never charged. If I did I guess I would have to look at how I work.

Then again I work on at least 90% referred business so charging a fee does not work. I believe a token fee of £250 can be charged and the com kept with out to much of a complaint.