Confused about Brokers

Choloesim

My partner and I would like to buy our first home but don't know how to find a good broker that doesn't charge fees. Where do we start looking? Also how free is a 'free' broker. We'd obviously like one that has access to the whole market but will using a broker add more money to our mortgage? Or is their service truly free?

Any advice would be much appreciated!

ACG

If you use a fee free broker, they will earn their income from commission only. It does not (usually) cost you anything directly or indirectly to use a fee free broker.

There are usually downsides to that. There is a saying - cheap/good/quick - you can have any 2. Cheap and good means they are probably going to be quite busy. Cheap and quick - are they rushing to move on to the next job? You get the idea.

We charge fees, that means we can afford to limit the work we take on so we are around if you have questions or problems arise, we also deal with the estate agents on the customers behalf etc. Nothing against fee free brokers at all, but it is unusual for someone to be good, quick and cheap.

In answer to your question, have a look online you will find reviews and things. Give them a call, have a chat with them. It is a 2-3 month process which can be stressful, do you feel comfortable and happy that the person you are dealing with is good?

Choloesim

Thanks for the speedy reply

So free is free but you might have issues with quality and speed of service.

Can I just ask (if I'm allowed on the forum!) how much roughly would a fee charging broker cost? We're looking to buy a house between 450,000 to 500,000. Also how and when is the fee paid?

I want someone to get me the best deal possible but I don't want to potentially waste money I could spend on my new home!

SonOf

Also how free is a 'free' broker.

they will only consider commission paying lenders.

Most brokers only charge a small fee. £150-£500 is the typical range. Most around the £195 to £295 mark. This is because the commission on mortgages is actually quite low.

If you are in London or around the high house price areas, then charging a fee could be viewed as greedy. However, if you are in areas of low house prices, then a mortgage broker would find it difficult to offer services without charging a fee. e.g. £100k borrowed at 0.3% commission is just £300. Whereas £600k borrowed at 0.3% is £1,800.

Some brokers may have a fee as their default but will not charge it when its a larger mortgage.

You generally find the factory line broker services are fees free but then they generally employ low quality staff. Its the bottom of the pole on the career path. So, lots of newbie mortgage advisers or those that wouldnt be able to make it outside of an employer. Plus, they will generally be lower paid and that does not attract quality. Factory line services are targetted to do so many cases and when they are off the phone with you they are on to the next one. Usually, the admin is dealt by unqualified clerical staff. All that is fine if your case is straightforward and simple. However, if you are pushing limits or have some more complicated issues, you really dont want to be using a factory line service.

[Deleted User]

My fee is up to 1% of the loan amount depending on complexity of the case. 'Standard' fee is just shy of £500 but if its a good sized mortgage then I have been known to go as low as £99 or £150, sometimes waive the fee altogether.

I am in a position where i am not desperate for business so if someone wants to go elsewhere for a lower fee I need to look at the value of the case and decide if its worth my time. Every new case that I take on reduces the time I spend with my other clients.
Well over 50% of my business comes from recommendations and referrals so the service bit is much more important to me than some of the firms where you are just a number.


If you want someone to submit your mortgage application and be done with it then fee free might work for you.
If you want someone who helps you fill in the legal paperwork, witnesses signatures, offers on your behalf answers questions about what indemnity policies are, what surveys mean, should you worry about xyz etc then a more involved fee charging broker may be worth your time.
You only have to read half the threads on here from people buying a house to realise that there is so many unexpected things that come up and you might want an experienced set of ears to listen to your questions that you think are daft but they have heard hundreds of times before
( i have had 3 FTB's in last few months ask me how to set up gas and electric in a new house. Silly question if you've bought a house before but if you havent then having someone who can fire a quick email back with an answer is quite important)

There are thousands and thousands of brokers, there are loads of different business models and it might be that you need to meet with a few and see how you feel about them.

ACG

Its funny you say you want the best deal. Usually when we talk to customers about the best deal, most are happy to trade off an extra £x a month in exchange for an easy lender.

Some lenders are fussier than others and will want the kitchen sink, others will be a piece of cake. On a £500k mortgage you are probably going to get an element of extra checks as it is a large mortgage, we have one going through at the minute and the lender has a "concierge service" basically I dont have to call up the call centre to get a question answered, I call up the dedicated point of contact.

Fees, I agree with JMA will be anywhere from £0-500, our standard fee on mortgages is around the £500 mark, would be more for mortgages under £80-90k, but would be less for cases over £300k. Difficult to say as it will depend on the broker and their structure. To be fair on a £500k mortgage, you would probably get a low/no fee and good service as the commission alone would be healthy.

Retired_Mortgage_Adviser

A free broker is free in that they don't charge you any fees for their services and rely solely on the procuration fee (around 0.3-0.35% of the mortgage amount) for their earnings. They might also try to sell ancillaries (conveyancing, home insurance, wills, etc) and protection but they are unrelated to the mortgage itself and you are under no obligation to proceed on those products. MSE has a page where it lists some fee-free brokers.

Thanks to the generosity of VCs who happily fund loss-making startups in their growth phase, you could even be paid for using a free broker by going to one of these through cashback websites like Topcashback or Quidco. For example, using TCB, one online broker will pay cashback starting from £50 (100k or less mortgage) up to £600 for a 400k+ mortgage, aother will pay £427 for any size mortgage. If your case is fairly straightforward, it's an absolute no brainer for a moneysaver.

As an ex-broker myself who could go through my old firm (which usually charges a modest fee) for a fee-free mortgage, I prefer to remortgage my rentals through these online cashback-giving brokers purely because I can access the exact same deals with broker paying me hard cash for the privilege of serving me. Even for simple product transfers!

If a business is happy to make a loss on services provided, as a consumer I'm more than happy to take advantage of that temporary window of opportunity. :beer:

Choloesim wrote: »

My partner and I would like to buy our first home but don't know how to find a good broker that doesn't charge fees. Where do we start looking? Also how free is a 'free' broker. We'd obviously like one that has access to the whole market but will using a broker add more money to our mortgage? Or is their service truly free?

Any advice would be much appreciated!

amnblog

May I suggest that focus when making a half million pound purchase should be getting the right advice and service, not on who will do it for nothing.

Andysandy

I agree that fees is not necessarily the most important factor in choosing a broker for your mortgage needs.

However, from my experience, unless you have a complex set of circumstances, more likely than not there is a fee free broker out there good enough to do the job. In the recent past, fee-charging brokers have been increasingly open to offering a discount or even waiving their fee if they feel you might go to a free broker, so you can use that as a negotiating tactic too.

If you do end up with a fee-charging broker, any fees should only be paid at the point of application, at the earliest. There are a few cheeky brokers (mostly estate agent based) who try to charge for advice (or for getting you a DIP), there is no need for that at all.

cjv

Skimmed over the thread, but I will just add that my first choice broker charged a £500 fee. He seemed to have no interest in my case and after 2 weeks of next to no contact from him I parted ways.

I then walked in to a local broker's office, gave him all my details and within a few days had an offer from a high street lender!

A fee charging broker can be good or bad.

A fee free broker can be good or bad.

If possible, get some recommendations from friends or family and do some research online for local brokers.

Choloesim

Thanks everyone for your helpful answers!
Our situation is quite straight forward so I'm considering trying to find someone fee free... although I'm not going to rule out paying a fee charging broker... as I've contacted a few fee free ones and no one has gotten back to me yet!!!