Mortgage broker - ask me anything

K_S

george4064 said:

Would it be rude to ask my mortgage broker how they take their commission from my mortgage product? He says he’s a whole of market broker.
Also, what is the best way to ascertain if I am getting value for money with my mortgage broker? I want to approach my lender directly to see what rate I can get by going directly but for some reason I don’t want to go behind my brokers back. (Loyalty I guess!)
Currently I have £176k mortgage with NatWest on a property worth £430k with a few years left on fixed period, both mortgage and property in my sole name.
looking to purchase property for around £650k, which will require me to borrow additional £224k on a two year fix (to align with existing fixed mortgage). As part of the purchase, my partner will be on the deeds and included in the mortgage, so affordability is fine. New property will have an approx LTV of 62%.

@george4064 You don't really *need* to ask him, unless of course you do that as a matter of course

As a rough guide, you can assume that the lender pays about 0.3-0.4% (differs slightly from lender to lender) of the loan amount as a procuration fee (commission). Then there are 1 or 2 (depending on how the broking firm is set up) companies in the middle who take a nibble at that and the net amount lands (a few weeks after completion) in your broker's firm's account. That's the broking firms revenue from your mortgage.

The gross proc fee will also be clearly specified in the illustration/KFI/quote that the broker sends you. Something like this - Accord Mortgages will pay <MORTGAGE CLUB> £500.00 for arranging this mortgage, a proportion of which will be passed on to <BROKER FIRM LTD.>.

george4064

K_S said:

george4064 said:

Would it be rude to ask my mortgage broker how they take their commission from my mortgage product? He says he’s a whole of market broker.
Also, what is the best way to ascertain if I am getting value for money with my mortgage broker? I want to approach my lender directly to see what rate I can get by going directly but for some reason I don’t want to go behind my brokers back. (Loyalty I guess!)
Currently I have £176k mortgage with NatWest on a property worth £430k with a few years left on fixed period, both mortgage and property in my sole name.
looking to purchase property for around £650k, which will require me to borrow additional £224k on a two year fix (to align with existing fixed mortgage). As part of the purchase, my partner will be on the deeds and included in the mortgage, so affordability is fine. New property will have an approx LTV of 62%.

@george4064 You don't really *need* to ask him, unless of course you do that as a matter of course

As a rough guide, you can assume that the lender pays about 0.3-0.4% (differs slightly from lender to lender) of the loan amount as a procuration fee (commission). Then there are 1 or 2 (depending on how the broking firm is set up) companies in the middle who take a nibble at that and the net amount lands (a few weeks after completion) in your broker's firm's account. That's the broking firms revenue from your mortgage.

The gross proc fee will also be clearly specified in the illustration/KFI/quote that the broker sends you. Something like this - Accord Mortgages will pay <MORTGAGE CLUB> £500.00 for arranging this mortgage, a proportion of which will be passed on to <BROKER FIRM LTD.>.

Thanks for your detailed reply.

With my existing mortgage (originally £200k) I paid a £995 Arrangement/Booking Fee.
The credit intermediary fee (the bit you mention in bold) was £800, and there was a further £250 ‘Mortgage Intermediary Fee’.

If I have understood correctly, if I went directly I would still have to pay the Arrangement/Booking Fee however I would save on the credit and mortgage intermediary fees (£1,050 in total). On the flip side, I most likely got a better rate of interest by going via a broker than going directly, so it’s hard to tell if those fees were worth it or not.

I also assume that all these fees are one-offs, and are not ‘baked’ into the interest payments I make monthly?

I guess there is also a non-monetary benefit of going via a broker, which was convenience and ease.

Appreciate your comments on my understanding (or lack of!)

K_S

george4064 said:

K_S said:

george4064 said:

Would it be rude to ask my mortgage broker how they take their commission from my mortgage product? He says he’s a whole of market broker.
Also, what is the best way to ascertain if I am getting value for money with my mortgage broker? I want to approach my lender directly to see what rate I can get by going directly but for some reason I don’t want to go behind my brokers back. (Loyalty I guess!)
Currently I have £176k mortgage with NatWest on a property worth £430k with a few years left on fixed period, both mortgage and property in my sole name.
looking to purchase property for around £650k, which will require me to borrow additional £224k on a two year fix (to align with existing fixed mortgage). As part of the purchase, my partner will be on the deeds and included in the mortgage, so affordability is fine. New property will have an approx LTV of 62%.

@george4064 You don't really *need* to ask him, unless of course you do that as a matter of course

As a rough guide, you can assume that the lender pays about 0.3-0.4% (differs slightly from lender to lender) of the loan amount as a procuration fee (commission). Then there are 1 or 2 (depending on how the broking firm is set up) companies in the middle who take a nibble at that and the net amount lands (a few weeks after completion) in your broker's firm's account. That's the broking firms revenue from your mortgage.

The gross proc fee will also be clearly specified in the illustration/KFI/quote that the broker sends you. Something like this - Accord Mortgages will pay <MORTGAGE CLUB> £500.00 for arranging this mortgage, a proportion of which will be passed on to <BROKER FIRM LTD.>.

Thanks for your detailed reply.
With my existing mortgage (originally £200k) I paid a £995 Arrangement/Booking Fee.
The credit intermediary fee (the bit you mention in bold) was £800, and there was a further £250 ‘Mortgage Intermediary Fee’.
If I have understood correctly, if I went directly I would still have to pay the Arrangement/Booking Fee however I would save on the credit and mortgage intermediary fees (£1,050 in total). On the flip side, I most likely got a better rate of interest by going via a broker than going directly, so it’s hard to tell if those fees were worth it or not.
I guess there is also a non-monetary benefit of going via a broker, which was convenience and ease.
Appreciate your comments on my understanding (or lack of!)

@george4064

- Arrangement/booking fee: no difference whether you go direct or not

- Credit intermediary fee £800: This is the proc fee that I mentioned. If you use a broker, the lender pays them this fee. If you go direct, the lender saves this fee and (presumably) uses it for the expense they incur in providing the direct service. So there's no difference for you either way it doesn't impact the interest rates on the product and you don't save this money by going direct as you don't pay it in the first place.

- Mortgage intermediary fee £250: This looks like it's the fee charged by the broker and paid by you. So yes, you would save this by going direct or using a fee-free broker.

Carmen12

hi I have received all the documents to sign for exchange of contracts but I didn’t receive my mortgage offer extension the original offer will expire 13 of April I have spoke with the broker and she said they are working on it . Should I exchange the contracts or wait until I have the mortgage offer extension ? 

K_S

Carmen12 said:

hi I have received all the documents to sign for exchange of contracts but I didn’t receive my mortgage offer extension the original offer will expire 13 of April I have spoke with the broker and she said they are working on it . Should I exchange the contracts or wait until I have the mortgage offer extension ?

@carmen12 I can't really give any advice on your particular situation. But generally speaking, if I were in your place, in the current lending enivronment I wouldn't exchange unless I had the extension confirmed.

notation

So I'm very much a noob in areas like this and it probably shows, but I would be very grateful if you could give me some pointers with the following situation.

I'm considering adding to my existing mortgage borrowing.  At present, my oustanding Natwest mortgage is at 40% of the estimated value of the property.  The property is near Cambridge and I would anticipate the property value would only increase.  The minimum that Natwest allows to borrow on a mortgage is £10 K which is the amount I was considering, and I have a few questions about what happens when adding borrowing to your existing mortgage:

For what purposes can you add borrowing to your mortgage?  There is mention on the Natwest website of borrowing against the mortgage for home improvement, a car, or a holiday.  Part of it would actually be for home improvement in any event, but I was also considering paying-off an overdraft.  Would Natwest only consider adding borrowing to a mortgage for reasons like the ones they mention?  I would certainly  like to pay-off my 4k overdraft with this as well.

What kind of factors would be considered by the mortgage provider when looking at an application to add borrowing to an exisiting mortgage?   I am full-time employed in a very stable job.  My income is reasonable if not great.  My debts are an overdraft and 2 credit cards amounting to about 8K in total.  On current valuations there is approx 60% equity in the property.  In broad terms, what other kind of considerations are looked at when considering an application like mine?

Many thanks!

Percy06

I own a town centre apartment directly above 2 restaurants. I have approximately £75,000 outstanding on the mortgage which has about 5 years left. The apartment was valued 2 years ago at £300,000 by 2 estate agents. I am retired and have no income apart from my private pension. I would really, really like to to remortgage my apartment ideally with Equity Release, or failing that with an interest only type mortgage, for about £80,000. I have contacted Key Retirement and Age Concern who both promote Equity Release schemes and made enquiries but they have both said that lenders are not lending money out for properties in town centres above restaurants, as it is deemed too risky in this present climate. How long will this last……?

hollisandchar

Halifax refused to lend us the amount we need today . This is because my partners HR lady wrote my partner a letter and stated that his salary was split £28k basic and £17k guarenteed bonus. My partner has spoken to the company Financial Director and they have said that the HR woman has made a mistake and should not have put this and that he is happy to write a letter confirming that my partners basic salary is £45k, as stated in his employment contract.
Are Halifax likely to take this into consideration and do they ever change their minds once they have decided they cannot offer you the amount you require? 

MWT

Percy06 said:

I own a town centre apartment directly above 2 restaurants. I have approximately £75,000 outstanding on the mortgage which has about 5 years left. The apartment was valued 2 years ago at £300,000 by 2 estate agents. I am retired and have no income apart from my private pension. I would really, really like to to remortgage my apartment ideally with Equity Release, or failing that with an interest only type mortgage, for about £80,000.

Are you living in the apartment or is this a Buy-to-Let property?

K_S

hollisandchar said:

Halifax refused to lend us the amount we need today . This is because my partners HR lady wrote my partner a letter and stated that his salary was split £28k basic and £17k guarenteed bonus. My partner has spoken to the company Financial Director and they have said that the HR woman has made a mistake and should not have put this and that he is happy to write a letter confirming that my partners basic salary is £45k, as stated in his employment contract.
Are Halifax likely to take this into consideration and do they ever change their minds once they have decided they cannot offer you the amount you require? 

@hollisandchar I'm sorry to hear that. I don't know the details, so can't really give an opinion on what the chances of appealing your decline are.

Based on the limited info in your post - 45k guaranteed pay in the contract, paid in equal instalments over the year, if you were my client I would run this past a couple of other mainstream lenders (those who have the freedom to use a bit of common sense) and place accordingly. Tbh with a payslip that says "drawings" on it, I'd have dug into the pay details right at the outset and put the app with an appropriate lender.

But if you are tied to Halifax for whatever reason and time isn't an issue, perhaps there is some way to appeal a decline for direct customers? If you're using a broker, what are they suggesting as next steps?