How independent are Mortgage Brokers??

Joe66

I have a general question.

Having posted a separate thread regarding a mortgage I thought I had to only be told at the very last knockings I had not got it, I have had plenty of responses and advice from many people to which I thank. However, as I feel I had been let down after a wasted 6 weeks I did not want to go through the same painful process again without doing some sort of investigating first. So I thought it would be useful to do a bit of 'digging' this weekend to see exactly how Brokers work and how best to chose one. A question that is difficult to answer in this forum due to the strict rules, (which is OK), but still leaves people like me wondering who to really go to personally for advice and help.

Here's the thing, I have found that a lot of the brokers on offer use a central organisation such as Mortgage Next Network Limited, (there are others too), that 'package' the deal on their behalf who then in turn put the case to lenders on their books. So, if this is the case how much can the broker do as against being in the hands of others, just as we as purchasers are?

Also, if you do not have much luck with a given broker, you may well have the same with others you try as they may belong to the same network.

I'm sure there will be views from brokers on this thread and the purpose of this one is not to diminish the trust in brokers in any way, but merely to attempt to understand how the man in the street goes about not wasting their time if the end result is likely to be the same each time if they are not getting anywhere with their current broker.

Any comments or advise is most welcome

TBeckett100

Joe, I am a financial adviser and work with a mortgage broker. we are independant. the choice of product is selected based on conversation and a computer program that is used.

from experience of clients, a mortgage broker can be worth his weight in gold, often they will know where best to place your mortgage if it isnt standard and the emount of work they do for clients in return for a paultry proc fee from the lender amazes me. i wont advise on mortgages because it is a timely process (save for remortages) and my skills are better rewarded elsewhere. Also, the mortage broker has some sway in a decision that a man on the street could not have because they have build a rapport with the lenders

If you want independant advice, go to an IFA. I am sure there are charlatans out there, but there also also some decent professionals and they work hard for their clients!

dunstonh

Here's the thing, I have found that a lot of the brokers on offer use a central organisation such as Mortgage Next Network Limited, (there are others too), that 'package' the deal on their behalf who then in turn put the case to lenders on their books. So, if this is the case how much can the broker do as against being in the hands of others, just as we as purchasers are?

Do not mistake networks as being a negative. Networks offer compliance services as well as packaging and deals unique to them.

The problem is that some networks operate as a support service for advisers and are not at all instrusive. Whilst others operate almost hands on with the adviser more or less stuck doing what the network tells them to do. Some are as run as salesforces with league tables and sales managers.

You tend to find IFA networks do not intrude into the business of the IFA anywhere near as much as some of these mortgage networks. Perhaps that has more to do with the fact that most IFA networks have been round a long time. However, mortgage only networks are a much newer thing (in general) and there has been a bit of an explosion in these. I expect some consolidation on that front in the same way there was with IFA networks.

I recently had another IFA come to me to transact his personal business as he knew my network got the best deals for that particular transaction. Thats just the way it is. It is also no different to any other retail product or distribution channel where retailers can buy the products at wholesale prices better than others or worse than others.

Remember that at worst, a whole of market broker is going to have access to same deals that the lender offers normally. The amount of extra deals will depend partly on the network or what the broker has individually negotiated (note, not all networks allow individual negotiation).

Joe66

I'm not sure if you've taken offence or not to my post? Not intended as I've stated my question is how you know a truly independent, (if they exist). I have used very good brokers in the past and yes you are right I'm sure like any business they often do build up a good relationship with certain lenders which helps. I am really trying to find a way of seeing how one goes about finding a true independent and not using ones that all end up at the same doorstep. If that's not really possible, then at least I know.

To help me understand more, what can an IFA do that the Mortgage Broker can't in terms of a remortgage? As I'm not sure of the route to take now.

Joe66

dunstonh wrote: »

Do not mistake networks as being a negative. Networks offer compliance services as well as packaging and deals unique to them.

The problem is that some networks operate as a support service for advisers and are not at all instrusive. Whilst others operate almost hands on with the adviser more or less stuck doing what the network tells them to do. Some are as run as salesforces with league tables and sales managers.

You tend to find IFA networks do not intrude into the business of the IFA anywhere near as much as some of these mortgage networks. Perhaps that has more to do with the fact that most IFA networks have been round a long time. However, mortgage only networks are a much newer thing (in general) and there has been a bit of an explosion in these. I expect some consolidation on that front in the same way there was with IFA networks.

I recently had another IFA come to me to transact his personal business as he knew my network got the best deals for that particular transaction. Thats just the way it is. It is also no different to any other retail product or distribution channel where retailers can buy the products at wholesale prices better than others or worse than others.

Remember that at worst, a whole of market broker is going to have access to same deals that the lender offers normally. The amount of extra deals will depend partly on the network or what the broker has individually negotiated (note, not all networks allow individual negotiation).

Thank you

Makes a bit of sense to me.

TBeckett100

dont go to a mortgage brokerage, go to an IFA with a mortgage dept who are independent.

dunstonh

To help me understand more, what can an IFA do that the Mortgage Broker can't in terms of a remortgage? As I'm not sure of the route to take now.

IFAs are investment advisers. The term IFA has nothing to do with mortgages. However, some IFAs will also do mortgage business. Some will not. Increasingly, IFA firms have the IFA focusing on the investment business and a mortgage adviser focusing on the mortgage business.

If the recommendation was a 5 year fix from Halifax with an IFA (with their mortgage adviser hat on) or a mortgage adviser (who is not an IFA) then you get exactly the same product with the only difference being the quality of service from the individual.

Personally, I am of the opinion that an IFA that spends more time with mortgages wouldn't make a good investment adviser and many ought to drop their IFA status and become mortgage only. Equally an adviser that spends most of their time on investments wouldn't make a good mortgage adviser. Its the jack of all trades, master of none approach.

So, I would favour using a mortgage adviser only for mortgage business or an IFA that that is mostly mortgages. Avoid the salesforces and the packaged providers who say whole of market but are really just panel based and you should be fine.

As long as you see a true whole of market mortgage adviser, then they should be as close to independent as you can get. If you have doubts, then ask to see the research. Indeed, most will do it in front of you if they have access to their computer/laptop on the spot and you can see the results appear as they enter the details. You can then question and comment as you see the research being done and you will know that the outcome is the best option for you (or not).

Joe66

Thanks for the clarification