'Sub-Prime' fees made me feel icky.

dekh

Just seen the statement for a remortgage with transfer of equity.

It's 'sub-prime' so the people that really need the help.

Lender Fees: £165 - Paid by the client to the lender - now that's not bad.

Procuration Fee: £1599.84 - paid by the lender to the broker for recommending the mortgage - So not paid by the client, thankfully.

Broker Fee: £495 - Paid by the client to the broker.

Introducer fee - £275.53 - Paid by the client via the conveyancer to a firm the broker gets to provide a conveyancer.

Broker referral fee - ~£100 - Paid by the Introducer to the broker for using the service. Yes that's the right way.

Conveyancer fees - £169 (+vat) - Paid by the client to the conveyancer. There will be disbursements on top of this but they are unavoidable.

There is also a lender insurance of about £90 with an admin fee from the lender but I don't have details.

The total fees payable directly by the client appears to be about £1800 - added to the mortgage.

So the broker is getting ~ £2194.84 for recommending a 7.08% 2 year fixed rate mortgage.

This whole sub-prime business is so awful I just had to share, there has to be a better way.

otter1_2

There is a better way - renting. Buying a house is not the best option for everyone and if the only way someone can get the money to buy is by paying out a lot of money and allowing the lender to charge an inflated interest rate then perhaps that should be taken as a sign that they are not in a realistic position to buy?

pinkshoes

dekh wrote: »

This whole sub-prime business is so awful I just had to share, there has to be a better way.

Not borrowing what you can't afford?

chappers

It's not just the housing/mortgage market that operates like this, what ever item or service you buy, if it is outside of the norm you pay more for it. FACT

dekh

pinkshoes wrote: »

Not borrowing what you can't afford?

Yeah, but reading between the lines "remortgage with transfer of equity" is a major change in personal circumstances.

It's such a shame that when people are down this society takes great delight in sticking the boot in. To charge those that need the most help even more than those that don't is just a bit sad if not just a bit sick. Let's all prey on the weakest, that's easy money.

Kez100

But, if sub-prime, they don't need help to take on more debt, do they? The high charges put some off. You coud argue it is doing them a favour!

dekh

Well, I can't see it doing anyone but the broker and the lender a favor. I just don't believe this is the best deal the broker could find for his/her clients. Then again, if I was getting over £2K out of the deal maybe I'd be able to put old Jiminy Cricket in an airtight jar.

I hope the borrower doesn't end up losing everything

sarkin

There are brokers out there charging thousands, £495 is cheap.

Kez100

dekh wrote: »

Well, I can't see it doing anyone but the broker and the lender a favor. I just don't believe this is the best deal the broker could find for his/her clients. Then again, if I was getting over £2K out of the deal maybe I'd be able to put old Jiminy Cricket in an airtight jar.

I hope the borrower doesn't end up losing everything

If they do lose everything why will that be? A clue - it's not one of these....

1. Because the broker charged 2k
2. Because they have had current or historic credit problems and have chosen to take on more debt?
3. Because the house prices have fallen and they chose to buy at the top of the market?

Also, please do say why you don't think this is the best deal (to be so damning to the broker and to imply he is offering the wrong product to shore up his income I assume you have a professional opinion here)?


I'm not in a position to say if it is a good deal or is not, but it constantly annoys me that people who do not have good finances and with house prices maxed out and reposessions on the rise, they still think they have a god given right to even more cheap credit and to buy a home on mortgage.

dekh

sarkin wrote: »

There are brokers out there charging thousands, £495 is cheap.

The Broker gets ~ £2200 why not just take the ~£1600 proc fees from the lender, that comes out of the profit on the mortgage anyway. Why take the £495 direct from the client and the ~£100 kick back as well?

That's 3 lots of payment the broker gets, and for how much effort, and is it in the clients best interests? This just feels callous to me.

Brokers just don't have a duty of care to their clients as far as I can see.

dekh

Kez100 wrote: »

Also, please do say why you don't think this is the best deal (to be so damning to the broker and to imply he is offering the wrong product to shore up his income I assume you have a professional opinion here)?


I'm not in a position to say if it is a good deal or is not, but it constantly annoys me that people who do not have good finances and with house prices maxed out and reposessions on the rise, they still think they have a god given right to even more cheap credit and to buy a home on mortgage.

I can't give a professional opinion, as the thread title says : makes me feel icky.

I can only say that I feel the fees outweigh the service provided, both by the lender and the broker.

They aren't buying a home, they are remortgaging to cover the transfer of equity. A transfer of equity occurs, in this case, because one of the parties to the mortgage wants out and the remaining party has to pay over the equity.

It's a bad situation, made worse by only being able to get a poor deal. It's a shame.