Mortgage Brokers - What's The Point ?
Discussion
Need to remortgage in a couple of months to escape the clutches of the dreaded Northern Rock SVR, so phoned a mortgage broker based upon a pre-conception that they would have access to better deals that I would have directly.
Spent 30 mins on the phone answering numerous scripted questions and listening to listening to lots of martketing blurb. Was told I'd be phoned back within 24 hours with a recomendation.
Spent another 5 mins on the FSA mortgage comparison website doing a search in anticipation of the broker's recomendations.
Somewhat dissapointed when the broker phoned me back with nothing better than the products I'd found myself in my 5 min web search and indeed didn't tell me about the most competitive product I'd found (an HSBC product) since it's not available through intermediaries.
Even if I did want to proced with one of the recomended products, in order to earn a fee, the broker now has to convince me to process the application through him purely on the basis that were now "mates" and I should feel I now owe him something, rather than directly with the lender, or indeed through a cashback website which will kickback half of the broker fee to me.
I can see the value in using a broker if you have unusual or difficult circumstances, but based upon this experience for someone with straightforward circumstances I struggle to see the value add or the viability of the mortgage broker business model.
Am I missing something ?
Spent 30 mins on the phone answering numerous scripted questions and listening to listening to lots of martketing blurb. Was told I'd be phoned back within 24 hours with a recomendation.
Spent another 5 mins on the FSA mortgage comparison website doing a search in anticipation of the broker's recomendations.
Somewhat dissapointed when the broker phoned me back with nothing better than the products I'd found myself in my 5 min web search and indeed didn't tell me about the most competitive product I'd found (an HSBC product) since it's not available through intermediaries.
Even if I did want to proced with one of the recomended products, in order to earn a fee, the broker now has to convince me to process the application through him purely on the basis that were now "mates" and I should feel I now owe him something, rather than directly with the lender, or indeed through a cashback website which will kickback half of the broker fee to me.
I can see the value in using a broker if you have unusual or difficult circumstances, but based upon this experience for someone with straightforward circumstances I struggle to see the value add or the viability of the mortgage broker business model.
Am I missing something ?
Edited by Seight_Returns on Tuesday 23 December 10:06
Seight_Returns said:
Need to remortgage in a couple of months to escape the clutches of the dreaded Northern Rock SVR, so phoned a mortgage broker based upon a pre-conception that they would have access to better deals that I would have directly.
Spent 30 mins on the phone answering numerous scripted questions and listening to listening to lots of martketing blurb. Was told I'd be phoned back within 24 hours with a recomendation.
Spent another 5 mins on the FSA mortgage comparison website doing a search in anticipation of the broker's recomendations.
Somewhat dissapointed when the broker phoned me back with nothing better than the products I'd found myself in my 5 min web search and indeed didn't tell me about the most competitive product I'd found (an HSBC product) since it's not available through intermediaries.
Even if I did want to proced with one of the recomended products, in order to earn a fee, the broker now has to convince me to process the application through him rather purely on the basis that I should feel I now owe him something rather than directly with the lender, or indeed through a cashback website which will kickback half of the broker fee to me.
I can see the value in using a broker if you have unusual or difficult circumstances, but based upon this experience for someone with straightforward circumstances I struggle to see the value add or the viability of the mortgage broker business model.
Am I missing something ?
It doesn't sound like you've gone to the most specialised broker on the planet... then again, if your circumstances really are that simple, why would you expect the broker to find you anything different? Maybe, what you've found is the best thing for your circumstances. Maybe you should take his recommendation as confirmation it's the right thing to do. In my opinion the broker has done his job.Spent 30 mins on the phone answering numerous scripted questions and listening to listening to lots of martketing blurb. Was told I'd be phoned back within 24 hours with a recomendation.
Spent another 5 mins on the FSA mortgage comparison website doing a search in anticipation of the broker's recomendations.
Somewhat dissapointed when the broker phoned me back with nothing better than the products I'd found myself in my 5 min web search and indeed didn't tell me about the most competitive product I'd found (an HSBC product) since it's not available through intermediaries.
Even if I did want to proced with one of the recomended products, in order to earn a fee, the broker now has to convince me to process the application through him rather purely on the basis that I should feel I now owe him something rather than directly with the lender, or indeed through a cashback website which will kickback half of the broker fee to me.
I can see the value in using a broker if you have unusual or difficult circumstances, but based upon this experience for someone with straightforward circumstances I struggle to see the value add or the viability of the mortgage broker business model.
Am I missing something ?
hornetrider said:
bazking69 said:
My mortgage broker genuinely is a family friend. So he just gets us the best deal, we sign, he earns a few quid and we save alot of hassle.
You sure its the best deal though? Do you research the market?But yes, I do have a quick browse just out of interest.
I used a broker for my last few mortgages, and was very happy, he knew his stuff, and got me some great deals...
However when I switched a couple of months ago the previous guy had moved on, new guy just wanted the commission and didnt come up with anything better than I could have found, in the end I took the re-mortgage with my bank as their deal (at the time) was by far the best...
Turns out its worked out well for me so far as paying 0.79% over BOE rate, paid zero setup fee and theres no tie in...
However when I switched a couple of months ago the previous guy had moved on, new guy just wanted the commission and didnt come up with anything better than I could have found, in the end I took the re-mortgage with my bank as their deal (at the time) was by far the best...
Turns out its worked out well for me so far as paying 0.79% over BOE rate, paid zero setup fee and theres no tie in...
Our mortgage advisor put us on a base rate tracker a year ago. I could have found that on-line, I'm sure, but I would have had no idea just how much potential it had with interest rate drops. I would have gone for a fixed rate if it was up to me, I don't follow the financial news so I would have opted for the security of knowing what you pay each month. But we took his advice and have benefitted enormously from it.
Obviously there will be some good and some bad advisors, but the good ones will probably know some things that you do not.
Obviously there will be some good and some bad advisors, but the good ones will probably know some things that you do not.
My IFA has access to a wider range of deals than I can get at the bank. He also knows people in the banks, so can talk with them about my circumstances. He gets paid a commission, I get some advice on the economy/pensions and he finds me a great deal. Everyone's happy.
I could and sometimes do trawl for a good deal, but the one he finds is typically better. He has to tell me what commission he gets and he will always show me deals where he would make more, but which are worse for me. Happy to recommend him
T-J-K
I could and sometimes do trawl for a good deal, but the one he finds is typically better. He has to tell me what commission he gets and he will always show me deals where he would make more, but which are worse for me. Happy to recommend him
T-J-K
Essentially, a broker is only providing a bridge between you and the lender.
You can do without this bridge, if you are prepared to get off your backside and do the work.
The effectively exploit peoples lazyness. Unless your are in a quite difficult or complex position, it can pretty much be done by the individual.
However, doing it yourself will often not save you a penny.
Infact, the lender will do better out of you, because they are not paying a broker.
To be honest, you might aswell use a broker to do the work and then just check the results yourself.
You can do without this bridge, if you are prepared to get off your backside and do the work.
The effectively exploit peoples lazyness. Unless your are in a quite difficult or complex position, it can pretty much be done by the individual.
However, doing it yourself will often not save you a penny.
Infact, the lender will do better out of you, because they are not paying a broker.
To be honest, you might aswell use a broker to do the work and then just check the results yourself.
Ok here goes!
For very simple, 3 x salary below 75%, you could browse the internet then apply direct to a bank.(it may work)
Very few mortgages are that simple.
The OP found a great mortgage with HSBC, and he is right they don't deal with brokers, this is because they are not set up for any kind of volume. Out of interest did you take the HSBC mortgage deal? How long did it take? I advised a client of mine to go with HSBC back in May as they had the best deal, his survey was done 14 weeks later and the mortgage offer came out in October. He spent 4 months on the Northern Rock SVR and it cost him a fortune. He will never go direct to a lender again. Also over the summer, some lenders like Nationwide and Halifax tried duel pricing where deals where more expensive via a broker.
However, has anyone ever seen an adviser in a branch? The reason they earn £15,000 is that most are cashiers with some training, and useless.
75-80% of all mortgage business goes through brokers.
Brokers do get some special rates not available on the High Street just not many this year.
The reasons for using a broker are getting your mortgage actually agreed, time saving and knowing you will get a good deal. A good deal isnt always the cheapest rate. Everyone is different. How fast do you need it to go through? Would an offset be better than a traditional mortgage? Do you need flexibility? Are you going to move, have a baby, change job, get married?
With lenders tightening criteria all over the place, the chances of getting a no are getting more and more likely especially the "computer says no" with tougher credit scoring systems. A good broker can usually get a case agreed where another broker or a high street adviser cannot.
We never charge for advice. We do charge once we get a mortgage agreed to chase it through to completion.
Everyone needs a choice!
Edited to add I even told Tonker to go to HSBC as nothing could compare in the summer.
For very simple, 3 x salary below 75%, you could browse the internet then apply direct to a bank.(it may work)
Very few mortgages are that simple.
The OP found a great mortgage with HSBC, and he is right they don't deal with brokers, this is because they are not set up for any kind of volume. Out of interest did you take the HSBC mortgage deal? How long did it take? I advised a client of mine to go with HSBC back in May as they had the best deal, his survey was done 14 weeks later and the mortgage offer came out in October. He spent 4 months on the Northern Rock SVR and it cost him a fortune. He will never go direct to a lender again. Also over the summer, some lenders like Nationwide and Halifax tried duel pricing where deals where more expensive via a broker.
However, has anyone ever seen an adviser in a branch? The reason they earn £15,000 is that most are cashiers with some training, and useless.
75-80% of all mortgage business goes through brokers.
Brokers do get some special rates not available on the High Street just not many this year.
The reasons for using a broker are getting your mortgage actually agreed, time saving and knowing you will get a good deal. A good deal isnt always the cheapest rate. Everyone is different. How fast do you need it to go through? Would an offset be better than a traditional mortgage? Do you need flexibility? Are you going to move, have a baby, change job, get married?
With lenders tightening criteria all over the place, the chances of getting a no are getting more and more likely especially the "computer says no" with tougher credit scoring systems. A good broker can usually get a case agreed where another broker or a high street adviser cannot.
We never charge for advice. We do charge once we get a mortgage agreed to chase it through to completion.
Everyone needs a choice!
Edited to add I even told Tonker to go to HSBC as nothing could compare in the summer.
Edited by Smirnoff on Tuesday 23 December 11:04
Recently used www.mortgagegenie.co.uk - got a fantastic deal (tracker 0.98% over base) and they gave me 50% of the fee paid to them...
The site is worth a try, even just to get a feel for what rates are available to you.
The site is worth a try, even just to get a feel for what rates are available to you.
The husband of my wife's friend is a Mortage broker, who has made lots of money helping people who are too busy or too stupid or too scared to do their own research.
However he's also built up a property portfolio that he can no longer afford as he's not made a single £'s commission in 5 months.
Five years ago, I fixed our morgage at X % for 10 years, and he seemed quite put out that I did not put it his way, and admitted he could not find a better deal.
Getting the best deal is about research. Simple.
However he's also built up a property portfolio that he can no longer afford as he's not made a single £'s commission in 5 months.
Five years ago, I fixed our morgage at X % for 10 years, and he seemed quite put out that I did not put it his way, and admitted he could not find a better deal.
Getting the best deal is about research. Simple.
Swilly said:
A broker has no place, where you can do the thing for yourself.
A broker should only be used in situations where he has knowledge, ability, skill, contacts beyond that which you have yourself.
I think this is the point - it's the same with any 'agency' business. The value they add is their specialisation/focus on one particular set of skills. I've never used a mortgage broker, but were I in the market now, I'd certainly be calling one to help me sift out the best deal.A broker should only be used in situations where he has knowledge, ability, skill, contacts beyond that which you have yourself.
swerni said:
The jiffle king said:
My IFA has access to a wider range of deals than I can get at the bank. He also knows people in the banks, so can talk with them about my circumstances. He gets paid a commission, I get some advice on the economy/pensions and he finds me a great deal. Everyone's happy.
I could and sometimes do trawl for a good deal, but the one he finds is typically better. He has to tell me what commission he gets and he will always show me deals where he would make more, but which are worse for me. Happy to recommend him
T-J-K
Are an IFA and a mortgage broker the same thing?I could and sometimes do trawl for a good deal, but the one he finds is typically better. He has to tell me what commission he gets and he will always show me deals where he would make more, but which are worse for me. Happy to recommend him
T-J-K
Mortgage broker - does not cover all other areas eg investments/pensions.
Both need a Consumer Credit Licence (even if you are a fully qualified IFA) and to have passed the appropriate test to practice...
HTH
swerni said:
The jiffle king said:
My IFA has access to a wider range of deals than I can get at the bank. He also knows people in the banks, so can talk with them about my circumstances. He gets paid a commission, I get some advice on the economy/pensions and he finds me a great deal. Everyone's happy.
I could and sometimes do trawl for a good deal, but the one he finds is typically better. He has to tell me what commission he gets and he will always show me deals where he would make more, but which are worse for me. Happy to recommend him
T-J-K
Are an IFA and a mortgage broker the same thing?I could and sometimes do trawl for a good deal, but the one he finds is typically better. He has to tell me what commission he gets and he will always show me deals where he would make more, but which are worse for me. Happy to recommend him
T-J-K
A true Independant Financial Adviser will be able to access the whole of market and will be qualified to advise on Pensions, Investments, Mortgages, Insurance etc... Basically qualified to plan your whole financial situation. They should offer you the option to pay their fee (guaranteeing truly impartial advice, free from greed over commission), or if they receive commission from the product provider, to disclose that commission to you - the client.
An Independent Mortgage Adviser should have access to the entire market for mortgages (ie: Every lender bar HSBC). You still have the option to pay them a fee instead of them receiving commission. Now, this is where it can get a bit murky - Mortgage Advisers are allowed to call themselves independent if they offer a range of products representative of the whole market. They can remain tied to an Insurance provider and still use the independent title, although they must disclose that they will only recommend insurance products from the insurers they are tied to.
A standard Mortgage Adviser (typically found in corporate estate agencies) will only recommend from a panel of lenders (typically 15-20), with a limited product range. They work on commission only from the lender which has to be disclosed. They will be tied to either a single insurer or a panel of a few different ones - typically those that pay the most commission.
Then you've got the bottom of the chain - The banks own mortgage 'advisers'... As others have said - Cashiers with a bit of training that take you through an elimination questionnaire.
seeing as it costs you no more to go with an IFA, why would you bother with the others?
Don't swallow the 'preferential deals because we are xyz plc' bulls
t...Real IFA's are the only ones allowed to use the term, and this logo:
It doesn't stop some of the others claiming they are IFA's... Just a heads up! Logo in the window says it all
Hope that helps
I have always been told by my dad to go direct to buiilding socieities when you want a mortgage.
However when I re-mortgaged earlier in the year, at the suggestions of my girlfriends parents, I used their IFA. The deals he suggested were the same as I found on the internet doing some basic research. I went with him though as I thought it would be the quickest route, although by the time he got around to entering all my details on to the online application form the interest rate on the deal has been increased.
I think that if I had been and sat down with someone at my local building society then the application would have been done there and then and I would have probably saved myself some money.
However when I re-mortgaged earlier in the year, at the suggestions of my girlfriends parents, I used their IFA. The deals he suggested were the same as I found on the internet doing some basic research. I went with him though as I thought it would be the quickest route, although by the time he got around to entering all my details on to the online application form the interest rate on the deal has been increased.
I think that if I had been and sat down with someone at my local building society then the application would have been done there and then and I would have probably saved myself some money.
Mx_Stu said:
I have always been told by my dad to go direct to buiilding socieities when you want a mortgage.
However when I re-mortgaged earlier in the year, at the suggestions of my girlfriends parents, I used their IFA. The deals he suggested were the same as I found on the internet doing some basic research. I went with him though as I thought it would be the quickest route, although by the time he got around to entering all my details on to the online application form the interest rate on the deal has been increased.
I think that if I had been and sat down with someone at my local building society then the application would have been done there and then and I would have probably saved myself some money.
Hmmm However when I re-mortgaged earlier in the year, at the suggestions of my girlfriends parents, I used their IFA. The deals he suggested were the same as I found on the internet doing some basic research. I went with him though as I thought it would be the quickest route, although by the time he got around to entering all my details on to the online application form the interest rate on the deal has been increased.
I think that if I had been and sat down with someone at my local building society then the application would have been done there and then and I would have probably saved myself some money.
Lenders don't just pull rates with no notice... A decent IFA will be in touch with the different lenders BDM's who will be telling them how much is left in the pot on certain rates. The lenders allocate a set monetary amount aside for lending on a certain product. Once it's used up that's it, but they'll know how long the rate is likely to last.
Sounds to me like he was using it as a hook, and then used the old 'well, we've got everything ready now' line. Didn't he?
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