I can only get a product with a fee

Dannydee333

I have had an application submitted on my behalf by my broker. I can't say I'm entirely happy about everything, but my back has been literally against a wall as apparently there are doubts about my financial eligibility or affordability for their standard loan process but offered an alternative tailored to individuals who do not meet conventional lending criteria, and this news was disheartening. The oddest thing about it is that my credit score is exceptional, so I don't understand the exclusion from ordinary products.

On the surface, this 'special product' seems accommodating, but it comes at the cost of an upfront product fee amounting to £1,500. This is most unwelcome as I wanted a product without a product fee. The costs involved by an individual at this time for buying a new sofa and beds and all that stuff, are already enormous, and to be told I'll need to fork out another £1,500 just to get an actual mortgage is rather irritating.

I'm new to this, sure, but it strikes me as strange that on the one hand, I'm being told I'm not trustworthy, but I will be trusted if I just pay us £1,500 first. Weird. Either you trust me or you don't.

This mortgage business is turning out to be one of the most unpleasant experiences of my life.

MWT

Dannydee333 said:

...as apparently there are doubts about my financial eligibility or affordability for their standard loan process but offered an alternative tailored to individuals who do not meet conventional lending criteria, and this news was disheartening. The oddest thing about it is that my credit score is exceptional, so I don't understand the exclusion from ordinary products.

You credit score is irrelevant when it comes to affordability, and is mostly irrelevant anyway, it is just a synthetic number made up by the credit agencies and not actually used by any lenders.

What matters is the events on your credit history and of course your ability to pay...

Dannydee333 said:

I'm new to this, sure, but it strikes me as strange that on the one hand, I'm being told I'm not trustworthy, but I will be trusted if I just pay us £1,500 first. Weird. Either you trust me or you don't.

Risk has a price, if it is only a product fee and not also an increased interest rate then that isn't quite so bad, and you can usually add the product fee to the mortgage to avoid having to pay it up front, and then pay it off after you complete on the mortgage as there is usually an allowed percentage for overpayments even with e fixed rate mortgage.

I would talk to your broker about what they are seeing in your details that is causing the problems though...

Richard1212

You have to know what your "special" problem is before you can decide on how to proceed. Will your current broker explain it to you ? And if he is proposing a fee of that kind  ?

I would start all over again, as if you had no previous knowledge, and apply yourself in the normal way. Then ask a new broker to look for you, without telling him anything about the previous broker's findings. It all sounds a bit Machiavellian but it's all I can think of that might break a chain that is binding you----or at least confirm that what has happened to you so far is a reality instead of a one-off aberration. Good Luck. 

Dannydee333

MWT said:

Risk has a price, if it is only a product fee and not also an increased interest rate then that isn't quite so bad, and you can usually add the product fee to the mortgage to avoid having to pay it up front, and then pay it off after you complete on the mortgage as there is usually an allowed percentage for overpayments even with e fixed rate mortgage.

Yes, I know I can "add it to the loan and pay it after completion" but the point is I didn't want to fork out another £1,500 at this time. Nor is it ideal to let it stay on the loan because then they get even more money on interest (as if they don't already get enough).

It just sounds to me like a revenue generator and I would not be surprised if someone pockets some of the unwanted £1,500 fee I've been hit with. I spent 6 years in sales, I know how add-ons and things like that work.

Dannydee333

Richard1212 said:

You have to know what your "special" problem is before you can decide on how to proceed. Will your current broker explain it to you ? And if he is proposing a fee of that kind  ?

I would start all over again, as if you had no previous knowledge, and apply yourself in the normal way. Then ask a new broker to look for you, without telling him anything about the previous broker's findings. It all sounds a bit Machiavellian but it's all I can think of that might break a chain that is binding you----or at least confirm that what has happened to you so far is a reality instead of a one-off aberration. Good Luck. 

It has been explained to me that it is simply an affordability thing. Still, very strange based on my income etc.

I don't think I have time to start over. I don't want to lose the home I've agreed to buy.

housebuyer143

Dannydee333 said:

MWT said:

Risk has a price, if it is only a product fee and not also an increased interest rate then that isn't quite so bad, and you can usually add the product fee to the mortgage to avoid having to pay it up front, and then pay it off after you complete on the mortgage as there is usually an allowed percentage for overpayments even with e fixed rate mortgage.

Yes, I know I can "add it to the loan and pay it after completion" but the point is I didn't want to fork out another £1,500 at this time. Nor is it ideal to let it stay on the loan because then they get even more money on interest (as if they don't already get enough).

It just sounds to me like a revenue generator and I would not be surprised if someone pockets some of the unwanted £1,500 fee I've been hit with. I spent 6 years in sales, I know how add-ons and things like that work.

If there is something in your credit file or affordability that is requiring you to need a specialist product you need to find out what. Is it the amount you are borrowing or you have missed payments? Which lender is the broker recommending?

The £1500 fee will be the lenders fee and the broker isn't pocketing some of it (that's not how sales work for mortgage advisors as it's completely not allowed). 

The interest on £1500 is really negligible, I would just add it to the loan and leave it. Btw,a fee isn't always the bad choice. In some cases it's cheaper to take the fee product over the no fee, so it might be that's why the broker has suggested it.

Dannydee333

If there is something in your credit file or affordability that is requiring you to need a specialist product you need to find out what. Is it the amount you are borrowing or you have missed payments? Which lender is the broker recommending?

The £1500 fee will be the lenders fee and the broker isn't pocketing some of it (that's not how sales work for mortgage advisors as it's completely not allowed). 

The interest on £1500 is really negligible, I would just add it to the loan and leave it. Btw,a fee isn't always the bad choice. In some cases it's cheaper to take the fee product over the no fee, so it might be that's why the broker has suggested it.

Yeah, I wasn't suggesting the broker was getting any of it but I wouldn't be surprised if someone at the lender gets something for selling the product with an add-on. I literally sold add-ons when I worked in the energy industry. Same concept.

I don't have missed payments. I've never missed a direct debit in my life.

The fee product may come with an ever-so-slightly better rate (very, very small) but that £1,500 would have bought my sofa or something.

Over the course of 20 years, let's say at 5% (theoretically) does that not mean they get 100% on that? i.e. the `1500 becomes 3000 overall? This is the last thing I want to do - give them even more money than the extortionate amount they will already be getting over the term.

theoretica

Yeah - mortgage lenders want to make as much money as possible.  Of course, if you overpay when you can afford it it will cut down the total interest you pay them.

MWT

Dannydee333 said:

It has been explained to me that it is simply an affordability thing. Still, very strange based on my income etc.

Ask them to explain again, with a bit more detail on the 'affordability thing...'.

That usually means you are trying to borrow too high a multiple of your earnings, or you have existing credit agreements and committed outgoings that reduce the amount you can borrow.

Either way they should be able to be clearer on the root of the problem.

Emmia

Have you tried going direct to the bank i.e. the one your salary goes to, and not using a broker at all? 

If your files are in order, with no marks (presumably you've checked all the different credit reference agencies, not just one of them) and the multiplier is reasonable on your salary (i.e. not 5x), no big payments going out, on cars, bitcoin, gambling, payday loans... and you have a good deposit level then that's where I'd be looking...

I really struggle to know why if people are in a good position to buy, that they'd use a broker, it just seems to be adding another layer to the whole process.

DullGreyGuy

Dannydee333 said:
The fee product may come with an ever-so-slightly better rate (very, very small) but that £1,500 would have bought my sofa or something.

Over the course of 20 years, let's say at 5% (theoretically) does that not mean they get 100% on that? i.e. the `1500 becomes 3000 overall? This is the last thing I want to do - give them even more money than the extortionate amount they will already be getting over the term.

But you can still buy the sofa as the £1.5k becomes part of the loan and just increases your repayments marginally. 

It does sound that money is tight with this purchase which is probably wants pushing you to this product. If monies improve later you can then over pay the mortgage and so reduce it quicker and save overall on the interest being paid. 

Have you considered a longer term than 20 years to reduce the repayments and potentially make it more affordable?