Do you tend to use a FA or go direct?

curtis122

Over the years I've only used a Financial Advisor twice and the majority of times have always gone direct with the lender. Just wondering whether other people tend to go direct and investigate and sort it themselves or use a FA?

I can understand if you have complicated or unusual situation using a FA but as 99% of ours have been pretty straight forward I've tended to go direct. Its not helped in wanting to use an FA at the moment as we recently had a bad experience with one giving us the wrong info and our re-mortgage falling through because of it, which I don't want to talk about. :-)

K_S

@curtis122 Assuming that you mean a whole of market mortgage broker, this thread has a good summary of what value a good whole of market broker can or cannot add.
https://forums.moneysavingexpert.com/discussion/6386119/what-can-a-broker-do-that-i-cant/p1

From the perspective of the overall market, between 70-80% of all mortgage applications are submitted through intermediaries.

curtis122

Thankyou. I have another question after reading that thread as I'm interested in the answer the other way.

Why would it be in the interest for a lender to favour working through FA rather then dealing with people directly?

Other than the lender using the FA to push them forward as a lender to get them business through commission payments, which surely is wrong if your going to a FA as an individual, as you want them to to do the best for you not just offer you one of the ones they get a good deal with.

From an external view I would have thought lenders would have preferred direct, if you took out any incentive out for FA's.

K_S

@curtis122 For advised business (the vast majority of current mortgage transactions) a few important reasons
- the advice (and future complaints) risk is held by the broker
- significantly simpler 'customer service' expectations Vs dealing with customers directly

- the inherent inflexibility in lender resources as they typically have an employed workforce that works 9-5 Mon Fri. While a broker might deal with a spike in business by putting in a couple of 12 hour days and working on weekends, that's not possible for lenders. Similarly when business is thin, brokers will flex their resources/effort accordingly.

For a combination of the above reasons, paying brokers a small proc fee of 0.3-0.4% of the loan size works for lenders.

For non-advised or execution only business lenders do indeed prefer to cut out brokers as their processing is almost fully automated.

As of today, the regulatory environment is such that only a small subset of mortgage applications qualify for non-advised execution-only business but if that changes then I'm sure we'll see lenders relying less on intermediary business.

The same regulatory environment also ensures that brokers have to recommend a product that is best suited to the applicant. I don't know of any broker that would risk their career for the sake of a hundred quid or so.

curtis122

Advised, non-advised and execution, these are are all words I've only just heard about through this forum. I understand 'Advised' will be FA, non advised and execution is that 'on your own'? Does anything change or become different depending on how its classed?

K_S

curtis122 said:

Advised, non-advised and execution, these are are all words I've only just heard about through this forum. I understand 'Advised' will be FA, non advised and execution is that 'on your own'? Does anything change or become different depending on how its classed?

@curtis122 'Advised' can be both through a mortgage broker (who will look at all the lenders they can access) or through the lender's adviser (who will look at all the products that that lender offers).

'Non-advised' and/or 'execution-only' refers to the applicant picking every aspect of the mortgage of their own volition - lender, product, term, repayment type, etc. For example if you're looking for a low LTV remortgage and your circumstances/requirements are standard (eg: term to 70 rather than 75), quite a few mainstream lenders' online systems will allow you to proceed on a non-advised/execution-only basis. 

From a consumer point of view, the primary difference of going down the execution-only route would be that the applicant would have less recourse to regulatory protections than when compared to an advised route. For many applicants, that's not an issue.

dunstonh

Over the years I've only used a Financial Advisor twice and the majority of times have always gone direct with the lender. Just wondering whether other people tend to go direct and investigate and sort it themselves or use a FA?

Its worth noting that most IFAs (individuals) do not do mortgages.    An IFA (firm) may employ mortgage advisers within the firm but the person you would see would be a mortgage adviser.  A smaller number of IFAs may still do mortgages if they are smaller firms/jack of all trades firms.

You should never use an FA due to their restrictions.

And its best to use a mortgage adviser for mortgages.  Nowadays, if an adviser tries to be a jack of all trades then something has to give.