Cashback on Mortgage being kept by Mortgage Advisor

MrsGreen0872 · 29 January 2020 at 4:02PM

We used an independant mortgage advisor who found us a decent rate on a mortgage with Natwest. We are now in the property, completion went without a hitch etc

After our last appointment with the MA, my husband had said to me "Oh I saw that mortgage had £1000 cashback on, that will be handy to put towards legal fees"
Anyway we paid legals etc on completion, but it reminded us to chase the advisor/broker for the cash back.

He said that he took the cashback himself as an introduction fee but not to worry as he took this into account by waiving HIS fee to US which would usually be £1000.

We were under the impression that MAs make their money from the lenders anyway...is this correct? I wonder if we should approach Natwest?

To people who have had a cashback on their mortgage...How is the cashback usually paid, and what were the time scales?

[Deleted User] · 29 January 2020 at 4:04PM

Check your mortgage offer. This shouod say who is getting what and any fees rhat are payable to various people.

Also you shouod have signed a fee agreement at the start. What did tyat say?

ACG · 29 January 2020 at 4:27PM

Section 4 mentions all fees payable.
If there is a fee for the broker in there and they did not charge you but took the cashback, not the best way to do things but you are no worse off.
If there is no broker fee in there and they took the cashback - ask them for the cashback.

Before proceeding, you should be 100% aware of what the brokers fee is. It is one thing I discuss on the initial phone call before doing anything.

Lenders do pay brokers commission and brokers do keep that, but some brokers (us included) charge a fee in addition to the commission. It is pretty rare the commission is enough for the work involved, unless you are applying for a £350k mortgage.

Cscott139 · 29 January 2020 at 4:28PM

£1000 fee is pretty ridiculous unless your case was extremely difficult to deal with and if it ended up with Nat West I would hazard a guess that it wasn't.

Any fees should have been agreed up front though and these should be documented.

MrsGreen0872 · 29 January 2020 at 4:30PM

it says my fee to him is £195, no mention of any cash back on the mortgage offer

Is this a thing that advisers just do?

SonOf · 29 January 2020 at 4:34PM

We used an independant mortgage advisor who found us a decent rate on a mortgage with Natwest. We are now in the property, completion went without a hitch etc

Did you employ the adviser on commission basis or fee basis?

He said that he took the cashback himself as an introduction fee but not to worry as he took this into account by waiving HIS fee to US which would usually be £1000.

This sounds like fee with commission offset. A model that works well with larger mortgages but not so good with smaller ones. However, the commission retained should match the fee. Any excess should be refunded.

We were under the impression that MAs make their money from the lenders anyway...is this correct? I wonder if we should approach Natwest?

Are you mixing up the commission on the mortgage with a cashback?

Cashback paid by the lender would be explicitly stated as much and paid by the lender to your bank. It would not go to the mortgage adviser.

I suspect there is some misreading or misunderstanding going on here.

it says my fee to him is £195, no mention of any cash back on the mortgage offer

So, where does it say there is £1000 cashback?

ACG · 29 January 2020 at 4:35PM

MrsGreen0872 wrote: »

it says my fee to him is £195, no mention of any cash back on the mortgage offer

Is this a thing that advisers just do?

Your broker has overcharged you by £805 then.
If the only paperwork you have is to say their fee is £195, I would send them an email advising them that you agreed to £195 not £1,000 and you expect a payment of £805.

That being said, the solicitor has sent the broker the £1000. They would normally only do this if there was a piece of paper signed by you somewhere.

Something does not stack up, but if you are adamant you agreed to £195, then I would email them and see what they say and then go from there. If you are not happy with their response, ask them about their complaints procedure and follow that.

Neutrinno · 29 January 2020 at 5:06PM

I agree with ACG. If £195 was the agreed fee from the outset on your mortgage illustration/terms of business, you need to flag this to them and ask for your cashback to paid to you immediately.

[Deleted User] · 29 January 2020 at 5:12PM

I have heard of brokers sharing the proc fee with the client but haven't heard of taking cashback in lieu of actual fee.
If a client doesn't have the fee upfront it's just simpler to agree to pay on completion.

I'm surprised a solicitor would bother themselves with settling a broker fee by transferring the cashback as that would get sent to the solicitor rather than the broker.

OP are yiu sure you aren't mixing this up with the Procuration Fee?

haras_nosirrah · 29 January 2020 at 6:30PM

Usually a cashback would be sent to the solicitor with the funds and they would knock this off the bill or it would be transferred direct to the client within 30 days of completion by the bank. How would the broker get their hands on it?

Retired_Mortgage_Adviser · 29 January 2020 at 7:50PM

No, as you have described it, this is definitely not normal practice by a mortgage broker.

As mentioned above, upon completion, cashback is usually paid to the solicitor or to the borrower's bank account. I myself have never heard of it being paid to the broker.

Natwest usually pays cashback to the solicitor on the day of drawdown.

Cashback on Mortgage being kept by Mortgage Advisor

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