Another FTB question - EAs trying to make you use their mortgage broker

James_D

Hi there, another first time buyer here!

I put in an offer for a flat this morning that I'd viewed over the weekend, after having discussed my circumstances with an independent mortgage broker and the broker doing a quick scan to find suitable mortgage products, which subject to a hard credit check looks to be positive and I'd be able to borrow what I need (£380k for a £400k flat with 5% deposit). I've also got a conveyancer in place in the event my offer is accepted.

When I made my offer, the EA told me that they had agreed with the vendor that all potential buyers needed to speak with their in-house broker to assess financial suitability. He gave me the impression that I pretty much have to get a mortgage through their in-house brokers in order to proceed. Is this even allowed? Surely as a buyer it should be at my discretion to decide on the broker that I use to find and secure my mortgage? Perhaps I'm reading in to things .. anyway I'd appreciate your insights.

Thanks very much!

SpiderLegs

Fairly standard criteria, but you are under no obligation to use their services.
Have the five minute call with their in-house broker where you tell them that you have your own broker who will be happy to confirm your financial suitability.

James_D

Hi there Spiderlegs, thanks for this. They have asked for all of the same documentation as the broker I want to use - should I just confirm the details of it over the call do you think, and make it clear I don't want to use them? It does seem borderline misleading that they make you chat with the in-house broker to confirm financial suitability for mortgage products without mentioning that you are under no obligation to actually use their services ..

MaryNB

James_D said:

Hi there Spiderlegs, thanks for this. They have asked for all of the same documentation as the broker I want to use - should I just confirm the details of it over the call do you think, and make it clear I don't want to use them? It does seem borderline misleading that they make you chat with the in-house broker to confirm financial suitability for mortgage products without mentioning that you are under no obligation to actually use their services ..

I had a similar problem. They want to get you to pay for their services but they can't force this. However, sellers often want the EA to make sure the buyer can actually afford the property. It was a bit of an issue last year when banks started pulling 5% and 10% deposit mortgages and tightening their lending rules. And I would presume EAs encourage this so they can increase the likelihood of buyers using their services.

In my case I refused the mortgage advice session several times until I had to reluctantly agree to a financial check. Totally bogus, it was a sales pitch for their mortgage brokering service and other services. I said thanks but no thanks. Went to my bank directly. I now own the house. 

James_D

MaryNB said:

I had a similar problem. They want to get you to pay for their services but they can't force this. However, sellers often want the EA to make sure the buyer can actually afford the property. It was a bit of an issue last year when banks started pulling 5% and 10% deposit mortgages and tightening their lending rules. And I would presume EAs encourage this so they can increase the likelihood of buyers using their services.

In my case I refused the mortgage advice session several times until I had to reluctantly agree to a financial check. Totally bogus, it was a sales pitch for their mortgage brokering service and other services. I said thanks but no thanks. Went to my bank directly. I now own the house. 

Thanks, I think it may well be more a sales pitch. They are about to call me .. 

James_D

Thanks again all - spoke with the in-house broker and explained from the outset that I already had a broker but would be happy for him to check my affordability. So that's all he did. Perhaps an over-reaction earlier on my part in thinking they were going to try and force me in to signing on!

MaryNB

James_D said:

Thanks again all - spoke with the in-house broker and explained from the outset that I already had a broker but would be happy for him to check my affordability. So that's all he did. Perhaps an over-reaction earlier on my part in thinking they were going to try and force me in to signing on!

I had the same fear and paranoia. In my case they were really pushing their mortgage broker. One of the agents was a total stereotype of a slimy agent and pretty much scheduled the appointment without properly asking me, treating it as if it was the next step. When I cancelled he tried to tell me it would make my offer look more attractive to the buyer. I still cancelled, then I got an automated email saying it had been rescheduled and I kicked off. The main agent was more reasonable and apologised and properly cancelled it. I did eventually have to do the "financial check", where I'm pretty sure the broker didn't look at my docs - he never asked me for them, I offered them given what I thought was the nature of the appointment and I had to send them all over again to someone else at a later stage. Thankfully it was online so he didn't see my face when he mentioned the £600 membership fee. I did actually try the lender he recommended and the AIP offered less than what he said they would offer me, and less than the lender I had already chosen.

James_D

MaryNB said:

James_D said:

Thanks again all - spoke with the in-house broker and explained from the outset that I already had a broker but would be happy for him to check my affordability. So that's all he did. Perhaps an over-reaction earlier on my part in thinking they were going to try and force me in to signing on!

I had the same fear and paranoia. In my case they were really pushing their mortgage broker. One of the agents was a total stereotype of a slimy agent and pretty much scheduled the appointment without properly asking me, treating it as if it was the next step. When I cancelled he tried to tell me it would make my offer look more attractive to the buyer. I still cancelled, then I got an automated email saying it had been rescheduled and I kicked off. The main agent was more reasonable and apologised and properly cancelled it. I did eventually have to do the "financial check", where I'm pretty sure the broker didn't look at my docs - he never asked me for them, I offered them given what I thought was the nature of the appointment and I had to send them all over again to someone else at a later stage. Thankfully it was online so he didn't see my face when he mentioned the £600 membership fee. I did actually try the lender he recommended and the AIP offered less than what he said they would offer me, and less than the lender I had already chosen.

Mine did attempt to actually help, asking whether I could stretch to a 10% deposit because there would be better products available, etc (and obviously I would if I could!). The only issue I have is that while yes, I can understand they need to know I'm not wasting people's time, but on the other hand it kind of gives them an idea of just how much I could actually afford based on my income, which makes me worried that they will really push for me to offer every penny I can. There was a flippant comment like, "oh you could well afford above the asking price .. "

MaryNB

James_D said:

MaryNB said:

James_D said:

Thanks again all - spoke with the in-house broker and explained from the outset that I already had a broker but would be happy for him to check my affordability. So that's all he did. Perhaps an over-reaction earlier on my part in thinking they were going to try and force me in to signing on!

I had the same fear and paranoia. In my case they were really pushing their mortgage broker. One of the agents was a total stereotype of a slimy agent and pretty much scheduled the appointment without properly asking me, treating it as if it was the next step. When I cancelled he tried to tell me it would make my offer look more attractive to the buyer. I still cancelled, then I got an automated email saying it had been rescheduled and I kicked off. The main agent was more reasonable and apologised and properly cancelled it. I did eventually have to do the "financial check", where I'm pretty sure the broker didn't look at my docs - he never asked me for them, I offered them given what I thought was the nature of the appointment and I had to send them all over again to someone else at a later stage. Thankfully it was online so he didn't see my face when he mentioned the £600 membership fee. I did actually try the lender he recommended and the AIP offered less than what he said they would offer me, and less than the lender I had already chosen.

Mine did attempt to actually help, asking whether I could stretch to a 10% deposit because there would be better products available, etc (and obviously I would if I could!). The only issue I have is that while yes, I can understand they need to know I'm not wasting people's time, but on the other hand it kind of gives them an idea of just how much I could actually afford based on my income, which makes me worried that they will really push for me to offer every penny I can. There was a flippant comment like, "oh you could well afford above the asking price .. "

In my case I could easily afford over the asking and they knew it. However, I was firm with my final offer, told them I wasn't willing to spend any more. You pay what you think it's worth, not what you can afford.

While an EA would like to sell for a higher price because they get more commission, they'd rather have a high turnover of properties selling at market value than entering stalemates with buyers because no one will budge on price. Commission on an extra £10k or so probably isn't worth losing a buyer over if no one else is offering. The could end up having to spend another several weeks marketing the property, knowing the longer it's on the market the more buyers will offer low because clearly no one is else is offering asking price.

I'd be more concerned about the sellers, an extra £10k is obviously worth more to them than the EA. But it's important to be firm. Just because you have more money, doesn't mean you are willing to spend it. If you don't think the house is worth more, tell them that and say your offer is final. You might not be able to afford it anyway if the bank downvalues it so that's a very good reason to refuse to increase your offer. Especially with such a low deposit. How does the price compare with other properties?