New Mortgage Broker Guide

Ian_Griffiths_Halifax

Hi Martin.

Sorry if I'm making suggestions that have been mentioned already, but I haven't had time to read all the thread and read the new guide yesterday.

I would like to see a note within the 'Going to a lender direct' section, warning people that one of the main reasons lenders want you to go direct is to sell expensive add ons. One of my clients was offered a Decreasing Term Assurance covering Life or Earlier Critical Illness for around £85 per month, which I managed to get for them with a very good company for around £30.

On the subject of fee charging, there are suggestions of a maximum 1% of the advance as a fee and charging .25 -.5% as a broker etc etc. Why are people charging a %age and not a fixed fee of say for example £500? The application form for a £60,000 mortgage is exactly the same size as the one for a £300,000 mortgage. This I pesonally find disgusting. Why should somebody pay £750 (.25% of a £300k mortgage) when somebody with a £60,000 mortgage would only pay £150 and yet I would defy any broker to be able to set up a clients mortgage efficiently and compliantly for only £150.

There are errors within some of your statements which I don't have time to go into now. When I have time I'll come back and explain.

payless

Ian's arguement could run for those working on commission only as well .. why should you take 0.35% on a £500K mtg ... if doing same 0.35% on £60K case .. article could comment that on larger cases you might be better to agree a flat fee ( with rebate of all commisison ) or a partial rebate ... a bit like the cashback site... BUT WITH ADVICE

Ian_Griffiths_Halifax

I think a cap on commission should be imposed, but the cap should be reviewed each year to allow for inflation.

Many years ago you would get a flat fee from a lender but it wasn't reviewed for a long time and so it's value was erroded.

Having said that, many lenders didn't give a procuration fee at all and most people didn't charge a fee. You would simply be earning the commission from associated products and hence the Endowment mis-selling scandle, though Banks and Building Societies were the biggest culprit, some Financial Advisers and Financial Services companies were also guilty.

Dan_Collins_2

MSE_Martin wrote: »

Thanks Dan, that's appreciated... hope I wasn't too hard on you... and hope business picks up... I suppose there's a cyclicality in this - in some ways the mortgage crunch should be good for MB's business - but the direct deals are the corrolary.

Martin your correct, if it was not for direct deals I would be smashing last year out of the water.

However because of the direct deals it looks like I cant beat so I will be joining them.

Ps. Do you mean Corollary

Ian_Griffiths_Halifax

Dan_Collins wrote: »

Ps. Do you mean Corollary

Either sound like a dreadful, life threatening disease

HelpWhereIcan

Overall, like the new guide. As positive towards brokers as we could ask.

new_article wrote:

This is a balance of ethics and practicality. By doing this you have taken the broker's time but not allowed it to be recompensed for the advice by gaining a fee. Overall, it's likely you'll want to stick with the broker who gave you the best advice, but the option to cut the cost is always there.

is nicely balanced when talking about 'sneakily getting the best advice for free'

new_article wrote:

…a broker’s weight on your side for £100,000s worth of mortgage transaction’s worth more than a few hundred quid cashback.

Is as clear a recommendation for the industry as we can expect to see from Martin (let alone other journalists) and is greatly needed at this hard time for all of us - client and adviser. :T

I even accept the point on protection

martin wrote:

While brokers are often the mortgage good guys, and obliged to scan the market to find you the best deals, the same rules don’t apply when they are selling associated products.

While some brokers will get you good deals, this isn’t guaranteed. The difference can be big money - £1,000s a year. Always compare the brokers offering with the cheapest result from the following guides.

We all know that there are brokers who are genuinely whole of market for mortgages but tied to single or small panel insurers.

and the paragraph heading

new_article wrote:

Don’t assume brokers are cheapest for associated products

is much fairer than the old one

old_article wrote:

Don't use brokers for ancillary products

The debate on advised vs non advised will go on, but overall balanced I think. (We have to work on your comments about Critical Illness etc now and how premium is not everything with these )

I would only add the same as Payless about explaining the fee only option in more depth and the fact that there are brokers who will look at the direct only deals as well on a fee only basis.

After all, a research fee will normally be £100 - £200 max. Much less than a full fee for administering a full application and could also be worth it's weight in gold.

I do think that the future of mortgage moneysaving for some could be to negotiate a fixed fee for the work and getting a rebate of any commission over that amount.

Most likely to be of benefit to those borrowing £200k or more, but still a benefit. As has been pointed out on here and as I said in another thread

HelpWhereIcan wrote: »

Dare I say that brokers working on a fee only basis may lead to a cash back scenario being more common for some people?

Afterall, given the same background circumstances, how much more processing time does a broker spend on a £300k mortgage than a £150k? Not twice as much that's for sure.

A broker charging a flat fee of £500 for advice and administering the application on a deal that pays commission at 0.35% would rebate £25 to a customer borrowing £150,000 but would rebate £525 to the customer borrowing £300,000 - how's that for moneysaving?

Possibly worth an article in its own right so maybe the new mortgage article is not the place for an explanation of this.

Overall, thanks Martin

MSE_Martin

THANK YOU!

Can i thank you all for your comments. Many of which have gone in, or been acknowledged in teh article in some form or other.

I think I've got an even more comprehensive guide on the back of it..> The final version will go live on top of the main guide later this evening so you can take a proper look then.

martin

Conrad

Looks pretty fair to me, but as others have said you can't please all the people all the time.

payless

Three more decent-sized brokers offer whole of market coverage, and no fee: Mform, Mortgage Monitor and First Mortgage. Mform is actually an execution-only service, with a linked fees-free broker to give advice if you need it. However its big plus is that the comparison includes all the deals that normal brokers can't offer (see below), so if you're confident in what you're doing, it's worth a look.
All three are new additions to this article, meaning there's no established feedback like we have for the big four. But if you want more opinions, give them a try, and please let us know how you found them. {Feedback}.

surprised this inclusion especially as
1. Looks like one of those recently spammed the board
2. Another lists deals but then directs to connected brokerage, saying you can't apply direct!
3. Most small brokerages deal nationally anyway - like most I've got clients from all around the country

I'm not saying this out of jealousy .. as some of you will know I was included in a previous version, but asked to be removed.


Fees based
comparison box at bottom still refers to a fees based broker as one who takes fees + commission ...
I would say ( and the FSA meaning of a fee based service- MCOB 4.3.7 - 4.3.9 http://fsahandbook.info/FSA/html/handbook/MCOB/4/3 ) a fees based broker is that " advice is based on fees - only" - as opposed to commisison based only, or Commission + fee .

whilst looks at the FSA MCOB document I notice

Whole of market

MCOB 4.3.4
(1) A firm which holds itself out as giving information or advice to customers on regulated mortgage contracts from the whole market must not give any such information or advice unless: (a) it has considered a sufficiently large number of regulated mortgage contracts which are generally available from the market; and
(b) the consideration in (a) is based on criteria which reflect adequate knowledge of the regulated mortgage contracts generally available from the market as a whole

{which to me means WoM does not mean just deals available to brokers }

Whilst I know the article is aimed at the general public, surely if using terms ( WoM , fee based) thats are enforced by the regulators you must use the same defination. Of course may have already changed these- I'm looking at last working document posted.

MSE_Martin

payless wrote: »

surprised this inclusion especially as
1. Looks like one of those recently spammed the board
2. Another lists deals but then directs to brokerage, saying you can't apply direct!
3. Most small brokerages deal nationally anyway - like most I've got clients from all around the country

I'm not saying this out of jealousy .. as some of you will know I was included in a previous version, but asked to be removed.


Fees based
comparison box at bottom still refers to a fees based broker as one who takes fees + commission ...
I would say ( and the FSA meaning of a fee based service- MCOB 4.3.7 - 4.3.9 http://fsahandbook.info/FSA/html/handbook/MCOB/4/3 ) a fees based broker is that " advice is based on fees - only" - as opposed to commisison based only, or Commission + fee .

whilst looks at the FSA MCOB document I notice

Whole of market

MCOB 4.3.4
(1) A firm which holds itself out as giving information or advice to customers on regulated mortgage contracts from the whole market must not give any such information or advice unless: (a) it has considered a sufficiently large number of regulated mortgage contracts which are generally available from the market; and
(b) the consideration in (a) is based on criteria which reflect adequate knowledge of the regulated mortgage contracts generally available from the market as a whole

!! which to me means WoM does not mean just deals available to brokers }

Whilst I know the article is aimed at the general public, surely if using terms ( WoM , fee based) thats are enforced by the regulators you must use the same defination. Of course my may have already changed these- I'm looking at last working document posted.

Don't look at that version - its not the right one that's the dummy - as I say the right one will be going up onlne tonight... that is an update by the team before my changes and read through