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    • JimmyTheWig
    • By JimmyTheWig 8th Jul 10, 4:05 PM
    • 11,856 Posts
    • 11,395 Thanks
    JimmyTheWig
    • #2
    • 8th Jul 10, 4:05 PM
    • #2
    • 8th Jul 10, 4:05 PM
    there’s no one best buy mortgage, there are too many iterations
    ...
    we have done some work already, especially on expanding the ‘finding direct deals route’, and I’d welcome suggestions
    Are there _really_ that many iterations?
    Ignoring credit scoring (i.e. this would only work for people with good credit histories) could you not have some sort of tool where a user would enter their income, house price and mortgage amount and then be told the best deals across each "type" of mortgage (e.g. 2yr fix, 3yr fix, 5yr fix, 2yr discount, etc).

    Surely there is a reasonably accurate answer to a question along the lines of "What's the best 5 year fix for someone with low income multiple and low LTV?" I don't know what that answer is, but there must _be_ an answer, surely?
    I appreciate that there is small-print type differences - e.g. overpayments, early repayment charges, etc. But if the tool gave the theoretical top 3 in each category then the user could look them up for the detail?
    • Seronera
    • By Seronera 8th Jul 10, 4:06 PM
    • 339 Posts
    • 160 Thanks
    Seronera
    • #3
    • 8th Jul 10, 4:06 PM
    • #3
    • 8th Jul 10, 4:06 PM
    Of course they are..but forever? Who knows.

    Remember in the 80s and 90s when all the regulators talked about was bancassurance, where they effectively wanted rid of the small IFA/ broker, and would prefer you to go to your bank as they were easier to regulate. Well the banks got greedy..or should I say greedier, and certainly alienated a lot of people with expensive product, mis-selling and often below average fund performance. People saw through the 'tied' aspect..so the regulators thought again and came up with the multi tie, just to muddy the waters a bit more..but I digress.

    Yes, the banks will effectively 'buy' this business with special deals, but it is not in their nature to provide value for money in the longer term, so all is not lost for the independent broker, as when the deal runs out, thats when a good broker can come into his own. It doesn't get any easier though does it.

    Seronera (20 years in financial services...but 10 years since i got out and went to do something else)
    • payless
    • By payless 8th Jul 10, 7:00 PM
    • 6,588 Posts
    • 2,343 Thanks
    payless
    • #4
    • 8th Jul 10, 7:00 PM
    • #4
    • 8th Jul 10, 7:00 PM
    Didn't we raise this issue over 2 years ago...

    Some brokers will offer a full search including direct deals but the extra research and likely no business at end, means a fee is needed ( maybe offset from commissions from any mortgage / insurances ?)

    This means fee free broker may not be best route, unless consumer is certain they can do own research as well.

    - but are the financial savvy already brainwashed into - free advice , and the less savvy/ lower end of market caught in a trap where they pay ( if fees / sale of poor value insurance) for inferior advice.

    Also leads to trust issue ... will the adviser do as promised.

    One major telephone adviser claims to offer all deals - but systems ( online and telephone script) seem to be bias towards " products they can process"

    Having just completed a degree, with an element of my last peice of work around this issue, I'm currently considering starting a PHD that covers this ( and other consumer issues in financial services ) but need to see if any suitable funding is around or at least some teaching hours
    Last edited by payless; 08-07-2010 at 7:04 PM.
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
    • cplatten
    • By cplatten 8th Jul 10, 7:06 PM
    • 47 Posts
    • 34 Thanks
    cplatten
    • #5
    • 8th Jul 10, 7:06 PM
    This is just so accurate
    • #5
    • 8th Jul 10, 7:06 PM
    I have remortgaged frequently over the past 18 years and the market has changed considerably.

    Up until April 2008, I always used my long-standing, trusted IFA. He had contacts within the industry and I felt secure knowing that I didn't have to do comparisons between lenders, as that was what he was getting his commission for. However, for the mortgage we wanted in 2008, my IFA no longer could find a lender who would lend to us, despite combing the market. I have to say that we did want a high multiple, but we have a high LTV, an immaculate credit record, a secure income and no other debts at all.

    In the end, the only mortgage available to us was sold via an estate agency - something I would never have considered previously - but we wouldn't have been able to move otherwise.

    When that deal expired in May this year, I spoke to my IFA again. Once again, he could not find anyone that wanted our buisness and told us that unless we could pay down more of the mortgage (ha ha!) we would have to stay with our existing lender. However, our existing lender was offering us various products, and our IFA looked over the options for us and gave us his professional advice as to which was the best deal.

    I offered to pay for this advice, as I valued it so much, and he was no longer able to gain commision from my mortgage deal. However, he declined payment because of our long-standing relationship and said that actually he dealt with so few mortgage deals nowadays that he didn't mind helping me out. His firm now makes all their money via investments and pensions.
    • jockosjungle
    • By jockosjungle 8th Jul 10, 7:19 PM
    • 751 Posts
    • 3,464 Thanks
    jockosjungle
    • #6
    • 8th Jul 10, 7:19 PM
    • #6
    • 8th Jul 10, 7:19 PM
    I'm currently going through the process of buying a house and saw a couple of brokers - one dodgy one in an EA who just looked at his panel of Countrywide lenders and a proper one. The truth is any broker can see all the deals, they just filter the ones where they get no commission out, i know this because when I told the proper MA that I could beat his best at both HSBC and Post Office he was able to show me the deals, how much the valuation could be, etc?

    The truth is that it isn't free advice and you can get a better deal by going direct, is there no happy middle ground where people can pay 50 for a proper mortgage consultant to show them the best deal for them, either direct or not.

    The main problem is that most peoples first and only experience of a MA is in a large chain EA, they give a very hard sell and are very pushy, they only check out a few mortgage companies and give a spiel about getting you a better rate than you can get yourself, which is a lie. On the other hand the person at the HSBC wasn't at all pushy, was happy to sit and talk to us about our mortgage options without being pushy at all, if he was on commission it wasn't likely to be the main bulk of his income and he was happy to spend a relaxed time with us discussing the various deals.

    I think if people can do their own legwork and check some websites then they will, if you cannot be bothered or have circumstances that some expert advice might help then see a real MA.

    R
    • cplatten
    • By cplatten 8th Jul 10, 7:48 PM
    • 47 Posts
    • 34 Thanks
    cplatten
    • #7
    • 8th Jul 10, 7:48 PM
    On top of everything else, mortgages are very hard to come by
    • #7
    • 8th Jul 10, 7:48 PM
    I think if people can do their own legwork and check some websites then they will, if you cannot be bothered or have circumstances that some expert advice might help then see a real MA.

    R
    Originally posted by jockosjungle
    It really isn't as simple as that.

    I first tried my real MA, who couldn't find anyone willing to lend us the income multiple we wanted (despite having been paying that multiple fine for the past 5 years!)

    I then tried a high street bank (HSBC) and got a 16 year old novice who got out a calculator and worked out what 3x our income came to and said they would lend us that!!! This was while sitting on Tottenham Court Road where the average 2 bed flat is 400k. It was like being back in 1991 when the recession made house prices affordable and I bought my first London flat with 3x a single income. It was totally unrealistic for today.

    It may be considered risky lending more than 3x income but there is now a case of shutting the door after the horse has bolted. The average house price is 10x the average wage - who can buy anything with that? And house prices have not fallen low enough or wages risen high enough to correct the balance.

    The EA was the only place we were even offered a mortgage and it was with Santander. I found out later that Santander have mopped up customers in the last few years because they have looked at the affordability criteria again when assessing a mortgage and not just pulled out a calculator.
    • libretto
    • By libretto 8th Jul 10, 8:10 PM
    • 22 Posts
    • 12 Thanks
    libretto
    • #8
    • 8th Jul 10, 8:10 PM
    • #8
    • 8th Jul 10, 8:10 PM
    The logical conclusion is less people will end up getting the advice, meaning more will be at the mercy of lenders’ spin and spiel on a very complex product.
    I'm not at all convinced that there is any loss here. On both occasions when I have taken out a mortgage I have gone to the "independent financial adviser" recommended by the estate agent, and on both occasions I have ended up worse off than if I had simply read a few banks' brochures and asked around for a bit of advice. The first time I had read in several places that a repayment mortgage was almost always the best option, but was bamboozled by the "adviser" into taking an interest only mortgage along with an investment (on which of course he took a big cut). The second time I had already researched the best mortgage deals so I knew what I was getting there, but the adviser insisted that I had to sign direct debit forms for several insurance policies in order for him to give quotes - and then went ahead and took out all those policies against my instructions, and ignored every phone call and letter telling him to cancel them.

    Sorry Martin, but I don't think anyone will be worse off. Those people gullible enough to take a salesman's word will be sold the wrong products as before, and those who do their own research and ignore the hard sell will be able to pick the product they want, just as at present.
    • cplatten
    • By cplatten 8th Jul 10, 8:37 PM
    • 47 Posts
    • 34 Thanks
    cplatten
    • #9
    • 8th Jul 10, 8:37 PM
    Not everyone is as financially savvy
    • #9
    • 8th Jul 10, 8:37 PM
    Those people gullible enough to take a salesman's word will be sold the wrong products as before, and those who do their own research and ignore the hard sell will be able to pick the product they want, just as at present.
    Originally posted by libretto

    While I agree with what you say, not everyone is as experienced or financially savvy as you now are. Unfortunately, you learnt the hard way, but that is even more why we need proper, Independent Financial Advisers who can not only help us with the right mortgage product, but look at how it fits into our overall financial planning.

    It is difficult to do our own research (and I have a business / economics degree) because of the sheer number of offers out there, of varying lengths, varying interest rates and varying fees. Even if you do your own research and find a great deal, in this tight market very few buyers seem to manage to jump through the lender's hoops anyway.

    I, for one, do not think all the industry are charlatans. I needed help in making the right decisions with 3 properties through 18 years up the housing ladder.
  • jhl1750
    mortgage broker genius
    We've just applied for a mortgage to help refurbish a house we bought at auction. Because we were non-resident in UK for the last 5 tax years, we bank in Cayman Islands (because we lived there and we are NOT money laundering!!) and my husband is a self employed consultant the bank just showed us the door. Without our broker I don't think we would have coped. He has fought for weeks to get us a mortgage and we now had confirmation this week. He has earned every penny of his paltry 295 fee, and I would recommend anyone who is not 'straight forward' to use a broker!
    • dunstonh
    • By dunstonh 8th Jul 10, 9:26 PM
    • 98,598 Posts
    • 66,990 Thanks
    dunstonh
    I dont think the fee option should be discounted as easily. My mortgage adviser offers fee option and often tells someone that going fee option is cheaper than going fees free as certain non commission paying deals are cheaper than commission paying ones. So, going fees free can cost more than paying fees.
    When that deal expired in May this year, I spoke to my IFA again. Once again, he could not find anyone that wanted our buisness and told us that unless we could pay down more of the mortgage (ha ha!) we would have to stay with our existing lender. However, our existing lender was offering us various products, and our IFA looked over the options for us and gave us his professional advice as to which was the best deal.

    I offered to pay for this advice, as I valued it so much, and he was no longer able to gain commision from my mortgage deal. However, he declined payment because of our long-standing relationship and said that actually he dealt with so few mortgage deals nowadays that he didn't mind helping me out. His firm now makes all their money via investments and pensions.
    Most of the IFAs I know have pulled out of mortgages. They employ mortgage advisers instead. However, what you describe is the common business model of a long standing client/IFA relationship.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • queen of string
    • By queen of string 8th Jul 10, 11:56 PM
    • 506 Posts
    • 3,879 Thanks
    queen of string
    I use a whole market broker as I am self employed and as well as my home, I have a rental property. Without him I would never have been able to get a mortgage or remortgage 2 yrs ago. Brokers will always have work with non standard customers and with more standard ones who dont want to do their own legwork.
    Eat food, not edible food-like items. Mostly plants.
  • jamesd
    An initial part of a remedy is perhaps the one imposed by the Office of Fair Trading following its investigation via the Competition Commission into the doorstep lending market: a requirement that all participants in the market register their deals on a shared site set up for the purpose.

    A second step would be a requirement for credit reference agencies to provide quotation search data to the site and for lenders to provide a close approximation of their credit file related rules to the site for automated analysis to better illustrate the true range of deals available to the consumer. A close approximation because such rules can be complex, but an alternative would be to provide the search data to a lender's systems for them to provide a reply, that could be limited to the larger lenders only for cost reasons.

    This would reduce some of the potential competitive advantage from keeping deals away from the broker market by making it easier for consumers to compare direct deals. And would also provide a useful service for consumers who could more accurately examine their options in conjunction with a broker.

    In my view the whole of market wording, as used today, is fundamentally misleading.
    • MSE Martin
    • By MSE Martin 9th Jul 10, 8:32 AM
    • 8,115 Posts
    • 42,285 Thanks
    MSE Martin
    Didn't we raise this issue over 2 years ago...
    Originally posted by payless
    Yes and its noted in my blog.

    However there's been a change of scale

    Then it was a few direct sellers, and a few banks who had better deals outside of the intermediary market.

    Now 50% of deals are direct - a mammoth turn around.

    THe scale and risk factors at missing direct deals are different now in my view.
    Last edited by MSE Martin; 09-07-2010 at 2:29 PM.
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

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  • Wakey2008
    Martin,

    What your blog fails to highlight is the reasons why banks and building societies are shying away from using brokers. In this gloomy climate, what do you think the reasons are?

    I'm an adviser for a building society and previously worked in underwriting for a major bank so I can give you the story from this side of the proverbial fence but am interested in what your view is.
    Last edited by Wakey2008; 09-07-2010 at 12:06 PM.
    I am a Mortgage Adviser and Freelance Journalist
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Conrad
    • By Conrad 9th Jul 10, 10:54 AM
    • 31,494 Posts
    • 55,821 Thanks
    Conrad
    SOME OF YOU MISSING SOMETHING HERE;

    1) Brokers are not needed by straightfroward clients - period. Those people can very easily do thier own research, no broker needed.

    2) Millions of people need brokers for the more complex cases. Outsiders will never understand just how complex client situations can be - the beneficiary that is inheriting a property but already lives in, yet her sibling wants a cut, but our client has three sources of income, one of which is paid in euros - for example.

    3) I often send clients to direct lender deals, but without me they would not know how to 'place' thier complex case so I charge up front a big fee, and they get the best deal for them.

    Commision heads are dinos living in the past. Fee based, is the only sustainable model, and is the best option for those with complex needs. The likes of L&C arranging mortgages are the equivolent of B&Q dishing out building seminars!


    As I keep on saying, brokers who traditionaly just farm the straight forward clients have no future.

    A reduced number of brokers will always prosper as long as they have the mind set and tanacity to get the ultra complex cases through.

    That's it.
    Last edited by Conrad; 09-07-2010 at 11:01 AM.
    • tripod2000
    • By tripod2000 9th Jul 10, 2:08 PM
    • 56 Posts
    • 35 Thanks
    tripod2000
    We should have been a straight forward case. I thank the Gods I went with a mortgage broker. He has really earned both the fee payable on completion and only on completion and his commission from the bank which he out right told us about as a matter of trust.

    So far 5 and a half months since offer was accepted and the second mortgage company we hopefully have movement. My sanity is nigh on owed to that guy!
    • JimmyTheWig
    • By JimmyTheWig 9th Jul 10, 3:06 PM
    • 11,856 Posts
    • 11,395 Thanks
    JimmyTheWig
    1) Brokers are not needed by straightfroward clients - period. Those people can very easily do thier own research, no broker needed.
    Originally posted by Conrad
    These are the people I was refering to in post #2. With a little nudge in the right direction these people would be able to do that research much more productively.
    • payless
    • By payless 9th Jul 10, 4:13 PM
    • 6,588 Posts
    • 2,343 Thanks
    payless
    Yes and its noted in my blog.

    However there's been a change of scale

    Then it was a few direct sellers, and a few banks who had better deals outside of the intermediary market.

    Now 50% of deals are direct - a mammoth turn around.

    THe scale and risk factors at missing direct deals are different now in my view.
    Originally posted by MSE Martin
    There's not been a mammoth turnaround , its just that its become more public knowledge .. 18-24 months ago was also a partilcular bad point, it got a bit better, then reversed again
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
    • payless
    • By payless 9th Jul 10, 5:51 PM
    • 6,588 Posts
    • 2,343 Thanks
    payless
    SOME OF YOU MISSING SOMETHING HERE;

    1) Brokers are not needed by straightfroward clients - period. Those people can very easily do thier own research, no broker needed.

    2) Millions of people need brokers for the more complex cases. Outsiders will never understand just how complex client situations can be - the beneficiary that is inheriting a property but already lives in, yet her sibling wants a cut, but our client has three sources of income, one of which is paid in euros - for example.

    3) I often send clients to direct lender deals, but without me they would not know how to 'place' thier complex case so I charge up front a big fee, and they get the best deal for them.

    Commision heads are dinos living in the past. Fee based, is the only sustainable model, and is the best option for those with complex needs. The likes of L&C arranging mortgages are the equivolent of B&Q dishing out building seminars!


    As I keep on saying, brokers who traditionaly just farm the straight forward clients have no future.

    A reduced number of brokers will always prosper as long as they have the mind set and tanacity to get the ultra complex cases through.

    That's it.
    Originally posted by Conrad
    I would agree that there is a place for brokers in complex cases... remember though in complex cases when a broker says fee , they usually mean "fee + commission"

    I do however feel that there is a place for average and high end clients.

    A lot of my clients are employed, most earn 50K plus , many 100K plus, some are employed in the finance industry with 1M+ incomes, yet the feedback I recieve is that they would rather have me source than have to compare deals themselves. These people want guidance and advice, but also want a good deal. Factory gate pricing seems the way forward... allow brokers to get access to all products ( afterall we pay regulatory fees) then charge an agreed fee if required.
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
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