Am I being taken for a ride?

Tinfoilhat

Hello everyone, new user here.....don’t worry despite my username I’m not a conspiracy theorist!

A little background; me and my partner are in the early stages of buying our first house (90% ltv, not the best credit record; she has an unpaid ccj of around £250 ish from a parking fine approx 5yrs ago and I have two defaults from around the same time for approx 5k which are now with (I suspect in-house) debt collection agencies and 75% paid off now. I also have 2 or 3 pay day loans on my credit file from approx same period although one is from approx 3 yrs ago) yes in years gone by we weren’t the best at being money savvy however in the last 2 years or so have turned our finances around and have become better at managing finances.

So as I suspected we aren’t really candidates for a mainstream mortgage, in a moment of desperation may have filled out a couple of lead capture forms on the web which resulted in a flood of calls and emails from various ‘specialist’ brokers across the country. One in particular seemed to work faster then the rest and on the same day placed us with aldermore and got us a DIP. Great, or so it seemed.

The main broker was on holiday at the time but the guy we were dealing with seemed to know his stuff and all seemed to be going well, we sent him wage slips, p60 bank statements the usual. All seemed promising. He said there’s a £495 application fee to aldermore payable upfront which if we don’t get the mortgage will be refunded.

Fast forward to today, the main broker is back from his holiday and is in the process of submitting our application to aldermore we just need to forward a couple of pieces of paperwork to complete the application before submission, this isn’t the problem

Included in the email detailing which paperwork I need to forward is a client agreement I hadn’t previously seen and the mortgage illustration etc which I hadn’t previously seen. My issue is with the broker fees being charged which I hadn’t previously been clearly made aware of; an administration fee of £495 for providing advice and submitting your application (which I have already paid) and a broker fee of £2,995 payable once the mortgage has been offered.

The exact wording on the client agreement which I have been forwarded to sign today is

“ the costs of our service
We charge an administration fee of £495 for providing advice and submitting your mortgage application and a broker fee of £2,995 payable once your mortgage has been offered. You must be aware that adding our fees to the mortgage loan will increase the total amount you pay over the term of the loan as the lender will apply their interest charges to this amount.

We will receive and retain any commission paid by the lender when your mortgage completes. This amount will be confirmed by your lender in their disclosure document.”

To me that just sounds like daylight robbery!! Anyone want to try suggest otherwise??

ACG

£3,500 in fees for a broker is ridiculous.
Your adverse is not THAT bad, there is the potential for high street rates - I would not guarantee it, but certainly worth a try as it will not harm Aldermore.

But in any event, £3,500 in broker fees is ridiculous and Aldermore do not charge application fees as far as I am aware.

Tinfoilhat

Thank you I suspected as much but as said as the main broker said he was off last week and it’s one of his underdogs that dealt with it last week none of this paperwork was sent to me so I had no idea on these charges until today. In fact when I questioned the 495 and where it was going before I payed it last week his reply was and I quote
“the fee is fully refundable by the lender and therefore if the application is declined by the lender the fee will be immediately reimbursed to you”

Now it seems reading through the client agreement the fee is not for the lender but the broker and is not refundable!

To say I’m slightly peeved is a huge understatement.

Tinfoilhat

Any suggestions re high st rates? Experience so far I’m seriously tempted to try go it alone.

ETA Halifax would give us 80% of what we need but want 15% deposit as a minimum.

LRmortgage

Find another broker.
That is a crazy amount to pay.
Even with your adverse history, I would expect broker fees to be around £500, maybe £750 at the top end all in.
Tell the current broker that you want a refund if the application fee you’ve paid as you weren’t aware of the rest of the fees.
All fees should be explained to you, before you commit and should be on a fee agreement that is given to you before the application starts.

Viki2410

It may or may not help but we in the process with Aldermore and did not have to pay an application fee. My credit report shows 1 (settled) default from 2 years ago and my fiance has good credit. We had a 5% deposit, 20% from H2B and 75% LTV with Aldermore, who paid for our survey also. We had to pay a £30 transfer fee and £999 product fee, but did have the option to add them to the mortgage if we wanted. Our broker was a local one who only charged £250.

MortgageMamma

Extortion pure and simple.

But you've already paid the £495 fee upfront I take it? If you have then you need to email in and tell this broker you were not made aware of the £2,995 fee and do not agree to it. They think they have got you by the balls because you have paid the £495 fee. If the £495 fee is for advice what is the £2,995 fee for?

I charge £275 a case whether it involves adverse credit or not. What they have quoted you is daylight robbery and you can still save money by going to another broker. There may also be a cheaper lender to use than Aldermore - your credit doesn't seem that bad to me - I don't know about the rest of your circumstances but based on what you've said so far Aldermore would have been about 2/3rds of the way down my list.

MM

Tinfoilhat

Thank you for you replies, I’m in the process of telling the brokers where they can go, I have already paid the 495 but via PayPal so there is hope of getting that back even if they don’t agree with it. Even if I don’t get the 495 back I’m still not going to be continuing with them. The cheek of it going as far to say they will also receive 1k kickback from aldermore which they will also pocket

Back to stage 1.....

MortgageMamma

I don't know how this works for other firms, but one of the firms I freelance for has rules that if they are charging more than £1000 advice fee (for investments as well as mortgages) they have to fill out a "fee justification form" for the charges. This is because there is a requirement on firms by our regulator to ensure fee's are not disproportionate to the transaction taking place.

I'm not a compliance expert but someone on here may be able to quote some legislation to you to confirm this and help you get your £495 back, as the firm you have dealt with have not been "clear, fair or not misleading".

Hope that helps a bit.

Sorry you have had such a negative experience with this particular mortgage brokerage, please dont let it tarnish other brokers in your mind, we are not all greedy, most of us have integrity and value our long term relationships with our clients above profitability.

JasonHand

£2995 is nuts. My adverse credit was far worse than yours and my broker charged me £599.

Hope you get sorted

ACG

Our fees go up to £1250 (although that is for people who were discharged from bankruptcy in the last 3 years). We do not need to write a justification letter, although I suppose the justification is that typically with recent bankruptcy there are also plenty of other things to go with it - pay day loans, defaults, CCJs - so it is easy enough to justify.

You will get the £495 back. Just write them an email asking for them to refund it as you were not made aware of the other fees which you believe is in breach of TCF outcomes 1 and 3. - https://www.fca.org.uk/firms/fair-treatment-customers

I wont guarantee you will get the money back, but I would be very surprised if you did not get the money back within 24 hours.