Mortgage Broker Hard Selling Insurance

zagfles

I've had this with dodgy mortgage brokers in the past. They make more from commission on insurances etc than they do from brokering mortgage (one of  them admitted this to me), and refused to broker me a mortgage unless I took out insurances or an endowment (yes it was a long time ago).

Have you tried going direct to the bank/building society for the mortgage? Cutting out the middleman?

ACG

zagfles said:

I've had this with dodgy mortgage brokers in the past. They make more from commission on insurances etc than they do from brokering mortgage (one of  them admitted this to me), and refused to broker me a mortgage unless I took out insurances or an endowment (yes it was a long time ago).

Have you tried going direct to the bank/building society for the mortgage? Cutting out the middleman?

Thats not quite true. 
It can be, but not always. 

But there is nothing wrong with a broker saying they will only do your mortgage if you take out insurance. However it needs to be discussed and agreed upfront. From the brokers perspective it would also be a good idea to document it and get it signed/agreed to via email. 

HobgoblinBT

It is a poor decision to take out a mortgage without life insurance unless you are single and without dependants and likely to remain so.  

Work related insurance benefits can be very cost effective, but be aware that they will end if you change employment during the term of your mortgage.  I worked for the same employer for 39 years so they worked fine fir me, but  most people these days change employers several times which could disrupt any work related insurance arrangements.

Check insurance rates online to compare to the broker’s offerings and employment related insurances, and be aware that insurance gets more expensive as you age.

DontBringBertie

ACG said:

zagfles said:

I've had this with dodgy mortgage brokers in the past. They make more from commission on insurances etc than they do from brokering mortgage (one of  them admitted this to me), and refused to broker me a mortgage unless I took out insurances or an endowment (yes it was a long time ago).

Have you tried going direct to the bank/building society for the mortgage? Cutting out the middleman?

Thats not quite true. 
It can be, but not always. 

But there is nothing wrong with a broker saying they will only do your mortgage if you take out insurance. However it needs to be discussed and agreed upfront. From the brokers perspective it would also be a good idea to document it and get it signed/agreed to via email. 

Spoken like a true mortgage advisor.

How is there nothing wrong with saying “I’ll only do my actual job if you buy other stuff through me too”?

zagfles

HobgoblinBT said:

It is a poor decision to take out a mortgage without life insurance unless you are single and without dependants and likely to remain so.  

Work related insurance benefits can be very cost effective, but be aware that they will end if you change employment during the term of your mortgage.  I worked for the same employer for 39 years so they worked fine fir me, but  most people these days change employers several times which could disrupt any work related insurance arrangements.

Check insurance rates online to compare to the broker’s offerings and employment related insurances, and be aware that insurance gets more expensive as you age.

Then you review your insurance requirement if/when you change jobs. It'd be a "poor decision" to take out insurance when you're already covered.

zagfles

DontBringBertie said:

ACG said:

zagfles said:

I've had this with dodgy mortgage brokers in the past. They make more from commission on insurances etc than they do from brokering mortgage (one of  them admitted this to me), and refused to broker me a mortgage unless I took out insurances or an endowment (yes it was a long time ago).

Have you tried going direct to the bank/building society for the mortgage? Cutting out the middleman?

Thats not quite true. 
It can be, but not always. 

But there is nothing wrong with a broker saying they will only do your mortgage if you take out insurance. However it needs to be discussed and agreed upfront. From the brokers perspective it would also be a good idea to document it and get it signed/agreed to via email. 

Spoken like a true mortgage advisor.

How is there nothing wrong with saying “I’ll only do my actual job if you buy other stuff through me too”?

Yes, perhaps mortgage brokers who won't broker a mortgage without selling insurances should be honest and call themselves "insurance brokers" if that's what they're more interested in selling.

K_S

With all due respect, I think the issue discussed in the post is being conflated with something else. 

The issue here is that the OP's mortgage broker is implying something that isn't true and appears to be retrospectively (ie after the terms of business have been agreed and advice has been given and acted upon) making the mortgage dependent on taking our protection through them.

What ACG is referring to is brokers that normally charge a fee (say £500) for arranging a mortgage but will waive the fee if the applicant takes out protection through them because the protection commission will compensate for the waived fee. This is agreed in advance of any advice taking place and usually documented clearly prior to any substantial commitment on either side. So this way the applicant is clear on the fee structure and can choose to take their business elsewhere or pick one of the fee options presented.

I hope the distinction above is clear. As a mortgage broker it's a matter of being honest and transparent at the outset so the client can make an informed choice.

And plenty of advisers do put Protection in their title/position. My professional signature identifies me as a "Mortgage and Protection Adviser".

zagfles

K_S said:

With all due respect, I think the issue discussed in the post is being conflated with something else. 

The issue here is that the OP's mortgage broker is implying something that isn't true and appears to be retrospectively (ie after the terms of business have been agreed and advice has been given and acted upon) making the mortgage dependent on taking our protection through them.

What ACG is referring to is brokers that normally charge a fee (say £500) for arranging a mortgage but will waive the fee if the applicant takes out protection through them because the protection commission will compensate for the waived fee. This is agreed in advance of any advice taking place and usually documented clearly prior to any substantial commitment on either side. So this way the applicant is clear on the fee structure and can choose to take their business elsewhere or pick one of the fee options presented.

I hope the distinction above is clear. As a mortgage broker it's a matter of being honest and transparent at the outset so the client can make an informed choice.

And plenty of advisers do put Protection in their title/position. My professional signature identifies me as a "Mortgage and Protection Adviser".

It should really be made clear before even visiting the "mortgage broker/adviser" so people don't waste their time in a pointless meeting, as happened to me. I went to a "mortgage broker" to broker me a mortgage,they advertised on the local radio that they would pay the socilitor's fees if you took out a mortgage through them! It turned out this was conditional on me taking out an endowment or insurances, I wasn't mug enough for the former and didn't need the latter, they then simply weren't interested in doing business with me (no offer of doing it for a fee, which I wouldn't have paid anyway, I just shopped around direct with banks and building societies, no need for a middleman).

K_S

@zagfles Your anecdotal example is indeed poor practice and I would suspect a few years in the past. I can't imagine compliance in any of the places I worked at/with allowing that kind of advertising any more.

And tbh that happens on occasion with unethical clients as well who first agree to the fee structure and then renegotiate after their mortgage has been secured. Over time you learn to suss out and avoid these type of clients. I'm sure you'll agree that that's poor as well.

My terms of business and fee structure are part of the first email exchange with the client and that's the case for most of the brokers I know. Like your good self, good brokers are very busy and would not want to waste time.

And it's absolutely understandable that you prefer to take out mortgages directly, there are plenty of folk like that. I've no complaints at all as there are also plenty of clients who see value in using a broker whether free or not.

I of course passionately believe that applicants are best served getting good advice  

ACG

DontBringBertie said:

ACG said:

zagfles said:

I've had this with dodgy mortgage brokers in the past. They make more from commission on insurances etc than they do from brokering mortgage (one of  them admitted this to me), and refused to broker me a mortgage unless I took out insurances or an endowment (yes it was a long time ago).

Have you tried going direct to the bank/building society for the mortgage? Cutting out the middleman?

Thats not quite true. 
It can be, but not always. 

But there is nothing wrong with a broker saying they will only do your mortgage if you take out insurance. However it needs to be discussed and agreed upfront. From the brokers perspective it would also be a good idea to document it and get it signed/agreed to via email. 

Spoken like a true mortgage advisor.

How is there nothing wrong with saying “I’ll only do my actual job if you buy other stuff through me too”?

Spoken like a true mortgage broker? Ouch! 
For the record, I do not do this. I never have as I do not agree with it. We charge a fee for the work we do, if you want insurance we take commission - or we can waive the commission and charge a fee instead. 2 jobs, we want paying twice. Arguably we would be more expensive, but like anyone we want paying for the work we do. The only discounts are to existing customers. 

However to answer your question:
1) There is nothing wrong with it if it is discussed and agreed upfront. This goes for anything in life does it not? 
2) This only really happens where a broker charges a fee and they are waiving their fee because they are getting commission from the insurer.