Mortgage Broker offered to waive fee

Savvy_Saver1 · 4 October 2017 at 12:08PM

Hi all,

First post, as a first time buyer!

I have been reaching out to some mortgage brokers, looking at L&C, Trussle, Habito, as well as a local independent. We wanted to go fee-free, but originally the local independent said he charged. He did say that they also offer a lot of support in house finder (knowing the local area and agents meaning they see properties early). We decided not to go ahead, I believe his initial fee was £500, but didn't quite catch it on the phone.

I spoke to him today to say we were going to go free-fee but thanks for the time. He asked me to email to confirm, which I did, and he came back saying that "If you are intending doing the relevant insurances then im prepared to waive my fee and still provide face to face advice , in addition to our property sourcing service"

I asked what insurances, and how much, he said "Typically buildings & contents , mortgage protection. Roughly £35-£50 ( I wouldn’t insist on any of it )". I don't know the frequency, but I guess he means monthly.

Does it seem I'm getting a good deal (maybe because he is low on work at the moment given time of year) or does this seem dodgy to anyone?

Thanks for any advice.

James

BISCUIT1 · 4 October 2017 at 12:27PM

Just a quick reply re the insurance figures...they seem really high to me...my renewal quote is £260 for the year and that is for a 5 bed house...and I have been on the comparison sites and have got it down to £160 ish..

Savvy_Saver1 · 4 October 2017 at 12:34PM

Good to know - looks like he is waiving his fee to sell expensive insurance to get the commission. I expected that would be the case, but given I wouldn't be obligated I am tempted to go ahead and just decline the insurance later on.

TrickyDicky101 · 4 October 2017 at 12:41PM

Savvy_Saver1 wrote: »

Good to know - looks like he is waiving his fee to sell expensive insurance to get the commission. I expected that would be the case, but given I wouldn't be obligated I am tempted to go ahead and just decline the insurance later on.

Just be careful not to agree to any insurance which has clawback provisions should you cancel before X years into the term - as the adviser will pursue you for this and will likely win in any court action.

caprikid1 · 4 October 2017 at 1:03PM

"Just be careful not to agree to any insurance which has clawback provisions should you cancel before X years into the term - as the adviser will pursue you for this and will likely win in any court action."

It is highly unlikely a broker will persue you for lost commission, they get paid by the mortgage lender as well.

I expect the broker will also talk to you about your protection needs in terms of life insurance etc. For this he will get a commission should you go ahead. The vast majority of mortgage brokers have a full comprehensive range of products.

Your local broker is probably worth a first initial meeting and there is nothing wrong or dodgy with him offering to waive the fee, this is entirely common if other business is being discussed.

Savvy_Saver1 · 4 October 2017 at 1:24PM

Thanks guys. I'll make sure to check the details of cancellation to ensure I don't get pursued for lost commission. Better to be safe than sorry.

I think realistically, we would want to take out Buildings, Contents, and Life insurance. I think it's unlikely we'd go for PPI, but given I work for a small-ish, young-ish company, it's something I would consider further.

Of course, we wouldn't want to take them out through our mortgage broker and over-pay if we could find better deals ourselves, but I think it's sensible for us to have a first meeting but be honest about that. He does seem fairly pushy (which I completely understand, he's after new business!), so just wanted to check out the fee waiving.

Thanks!

chappers · 4 October 2017 at 2:16PM

Whilst fee free might at first seem attractive it doesn't necessary mean you will get the best deal. Brokers who recoup their fees from the lenders are more likely to push you towards the deals that reward them the most, whereas if you pay someone for this work then it makes no odds to them and they will more likely act solely in your interest.
Either way the lender is obliged to inform you of any fees they are paying your broker.
I would be wary of getting into a conditional fee waiver deal, without being absolutely sure what you might be committing yourself to.

Savvy_Saver1 · 4 October 2017 at 2:32PM

Totally get that brokers are looking for commission, but even with paying a fee, they still get their commission and so are still incentive to push us towards a bigger reward for them. Regardless of what i do this with guy, I'll get quotes through L&C and two online companies too, to make sure I get the best deal.

Is there anything in particular to look out for in a conditional fee waiver deal? Is it just that I might be obligated to take certain insurances through him? If so, I'd only sign up if it was clear that I would consider his insurance suggestions, but was under no obligation to buy anything else through him. I do sort of think, maybe's its too good to be true - surely he would only waive the fee if he could make up the money elsewhere (or if he needs the work, and is happy with just commission from the lender)...

chappers · 4 October 2017 at 2:58PM

It's a tricky one depends what the conditions are.
You will have to ask and then make a decision based upon the deals he offers versus the conditions he imposes.
Just be straight with him and see what deals he puts in front of you and ask him what further commissions he will be earning. He is clearly up for cutting a deal.
He might find you a decent deal where he is getting a very low commission from the lender and it might be worth you paying him his fee or he might find you something that has a decent lender commission and you might be able to negotiate with him with regards to his fee.

wantonnoodle · 4 October 2017 at 3:45PM

Just for info. We used a fee free broker, and for the mortgage he only got £900 commission. This, however was dwarfed by the £3500 he got for our taking out of critical illness/life insurance and income protection insurance.

Bear in mind that my payment for these insurances is £78 per month. My partner didn't take the full set of cover because he has some pre-existing health issues they wouldn't cover.

Still - it shows that insurance is clearly better paid than the mortgage.

tori.k · 4 October 2017 at 4:00PM

I'm guessing it's pretty standard our broker charges a flat fee or is fee free if you use him for life insurance as well, with getting quotes from a few life insurance companies his was slap bang in the middle of the quotes we collected, so don't dismiss the idea off hand if he's been recommended a good broker is worth his weight in gold, and he has a living to make like the rest of us.

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Mortgage Broker offered to waive fee

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