# Would you be willing to pay a broker fee?



## euromortgage (18 Apr 2008)

With the announcement this week of banks slashing their commissions to brokers, I'd like to get peoples opinions on their willingness to pay brokers a fee to supplement their costs. Would you pay a broker fee for a standard mortgage?


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## LDFerguson (18 Apr 2008)

A very good question.  In case you get a resoundingly negative response, bear in mind that the folks on Askaboutmoney.com are generally more financially astute than Mr. & Mrs. Joe Public.  The very fact that they're on AAM confirms this.  

So while an Askaboutmoney regular might say "No - I'll do my own research and save myself the fee", there are plenty of people out there who wouldn't have the necessary knowledge to evaluate the differences between rates and rate types.


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## euromortgage (18 Apr 2008)

Thanks for the reply Liam. I agree with you that most on aam would be financially savvy but I think that they'll agree that people should be adequately paid for work that is done.


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## JJ1982 (18 Apr 2008)

Yes i would pay for it, so long as i am informed upfront about it i would have no problem for paying someone for work they have done on my behalf.


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## juke (18 Apr 2008)

As someone only mildly finacially savvy, but being a solicitor, recognise that people deserve to be adequately paid for work done...

If I were to consider paying for a a broker's services, I guess my big concern would be that they were 100% independent and only concerned with my needs rather than what commission they may get.

Can I presume then, that such a broker would charge a fixed fee, and any commission from a lending institution etc would be passed onto the client - or am i way off?


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## runner (18 Apr 2008)

Most people are willing to pay fees, as long as they are warranted, transparent and worth it!


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## euromortgage (18 Apr 2008)

I'm sure most brokers would probably structure it differently as suits their circumstances but basically it would be that the broker would have to receive a certain percentage of the mortgage whether this is made up from commission from the banks or a form of both commission + client supplement. As always this should not effect the brokers service levels to act independent and ensure the client is getting the best advice possible  .


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## Importer (18 Apr 2008)

In a situation where mortgage brokers start to charge the applicant for their services then my guess is that they will get some business from "difficult cases" but invariably will drive away other people who choose to save the fee by applying directly to the financial institution themselves.
I would have thought that most cash strapped FTBs will cut out costs whereever possible.


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## nai (18 Apr 2008)

euromortgage said:


> I'm sure most brokers would probably structure it differently as suits their circumstances but basically it would be that the broker would have to receive a certain percentage of the mortgage whether this is made up from commission from the banks or a form of both commission + client supplement. As always this should not effect the brokers service levels to act independent and ensure the client is getting the best advice possible .


 

Why should the fee be percentage based ? That is the most ridiculous pricing structure ever invented. Why should a broker get paid more for doing a similar amount of work on a 200k mortgage as opposed to a 2 million one ?

Same goes for solicitors - basing conveyancing fees on house price is equally as ridiculous.


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## euromortgage (18 Apr 2008)

The fees to clients would probably be in around .3-.5% . I'm sure if brokers start charging fees it will put some people off but at the end of the day your paying for a service with your interest in mind i.e. whats best for you.


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## shanegl (18 Apr 2008)

I'd be happy to pay a flat fee only. I would avoid any percentage based fee, no matter how good the service.


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## irishlinks (18 Apr 2008)

There will always be people that either can't understand what all the rates mean - or others who just can't be bothered to do the form filling and research  themselves. These kind of people will probably pay whatever a broker asks for .
 I think that charging commission based on the size of the mortgage is not right. There is probably the same amount of work involved for small and large mortgages - so a percentage fee is just not fair really.  
When commissions from lenders vary - I would tend to be suspicious (maybe incorrectly) of a broker's recommendations. *If* I were to use a broker - a fixed fee and a refund to me of any commission would be my preferred option.


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## irishlinks (18 Apr 2008)

I just noticed that Ulster have announced they are pulling out of the broker market. So if the others follow suit the brokers might have to chnage the way they charge pretty soon.


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## euromortgage (18 Apr 2008)

nai said:


> Why should the fee be percentage based ? That is the most ridiculous pricing structure ever invented. Why should a broker get paid more for doing a similar amount of work on a 200k mortgage as opposed to a 2 million one ?
> 
> Same goes for solicitors - basing conveyancing fees on house price is equally as ridiculous.



NAI

Currently banks commission structures are percentage based. But what I should have said is the percentage structure would probably be linked to pricing bands, i.e. the percentage decreases the higher the mortgage amount but there has to be a minimum base level which covers the cost of doing business. Also your assuming there is the same amount of work involved in all mortgage cases. The more money your looking for, the more diligent the banks are (more risk to them) in their requests for information, which creates more work for the broker in getting the correct info from the client and preparing it for the bank


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## shanegl (18 Apr 2008)

> Currently banks commission structures are percentage based. But what I should have said is the percentage structure would probably be linked to pricing bands, i.e. the percentage decreases the higher the mortgage amount but there has to be a minimum base level which covers the cost of doing business. Also your assuming there is the same amount of work involved in all mortgage cases. The more money your looking for, the more diligent the banks are (more risk to them) in their requests for information, which creates more work for the broker in getting the correct info from the client and preparing it for the bank


 
Much simpler and more transparent to just quote flat fees per pricing band surely?


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## demoivre (18 Apr 2008)

euromortgage said:


> With the announcement this week of banks slashing their commissions to brokers, I'd like to get peoples opinions on their willingness to pay brokers a fee to supplement their costs. Would you pay a broker fee for a standard mortgage?



Do Authorised advisers, who offer mortgage services, charge a fee in addition to any commission they receive from the lender? I assumed that they did.


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## LadyJane (18 Apr 2008)

Yes, knowing what I know now I would pay for a broker. We got a mortgage though a broker in September and I found the service invaluable. There is not doubt in my mind that we would not be sitting in this house if it was up to me to figure it all out on my own. Unlike many users on this site, I am no financial genius and am rather unorganised financially. It was great having someone on my side when we were approaching the financial institutions.


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## moondance (18 Apr 2008)

As an FTB last year, I used a broker to check out mortgages for me. It was "free" and they ended up getting me a good rate (one that I could have got myself but it cut out all the individual applications to different banks to find it). I think if brokers have to charge, they should offer a flat rate charge of no more than 100euro. Well that's the max I'd pay for this service regardless of property value.


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## euromortgage (18 Apr 2008)

shanegl said:


> Much simpler and more transparent to just quote flat fees per pricing band surely?



Yeah your probably right, it is more transparent. I'm just putting out what if scenarios at the moment and looking at the different structures. I think in any kind of scenario similar to this there there will always be both structues, flat fees or percentage based. Take for example Estate Agents, there are some who will charge a flat fee and others a percentage. Again you could argue theres the same amount of work in selling a house worth €1m and a house worth €300k. If you look at the UK market, the brokers we deal with charge a percentage fee to clients.


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## euromortgage (18 Apr 2008)

moondance said:


> As an FTB last year, I used a broker to check out mortgages for me. It was "free" and they ended up getting me a good rate (one that I could have got myself but it cut out all the individual applications to different banks to find it). I think if brokers have to charge, they should offer a flat rate charge of no more than 100euro. Well that's the max I'd pay for this service regardless of property value.



Everybody is entitled to their opinion of what a service is worth. One question though, we're you aware of this rate in the market before you approached the broker? Also if you were to take the time off work to investigate the different bank rates and offers, fill in apps etc, would you have lost more than €100 in wages assuming you werent paid for holidays?


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## LDFerguson (18 Apr 2008)

demoivre said:


> Do Authorised advisers, who offer mortgage services, charge a fee in addition to any commission they receive from the lender? I assumed that they did.


 
Do you mean Authorised Advisors as defined by the Investment Intermediaries Act?  If so, Authorised Advisor status doesn't cover mortgage intermediation.

If an Authorised Advisor also happens to be regulated as a Mortgage Intermediary, these are two entirely separate (although connected) businesses.


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## moondance (18 Apr 2008)

euromortgage said:


> Everybody is entitled to their opinion of what a service is worth. One question though, we're you aware of this rate in the market before you approached the broker? Also if you were to take the time off work to investigate the different bank rates and offers, fill in apps etc, would you have lost more than €100 in wages assuming you werent paid for holidays?



Ok then, if you had to charge a flat rate say on property worth between 100k-300k, what would you estimate that to be?

I would do the application filling, etc in my own time. I would check out a website such as this for the best offers with different banks which would save me time. The only reason I went with a broker was because they were recommended by a friend, there was no charge to me and they gave me a full list of offers (interest rates, repayment terms, etc) from 9 different banks where I was eligible and I was free to make a decision so I felt the advice was independent. 

I don't see why the consumer should lose out just because banks don't want to pay brokers big commissions any more.


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## euromortgage (18 Apr 2008)

moondance said:


> Ok then, if you had to charge a flat rate say on property worth between 100k-300k, what would you estimate that to be?
> 
> I would do the application filling, etc in my own time. I would check out a website such as this for the best offers with different banks which would save me time. The only reason I went with a broker was because they were recommended by a friend, there was no charge to me and they gave me a full list of offers (interest rates, repayment terms, etc) from 9 different banks where I was eligible and I was free to make a decision so I felt the advice was independent.
> 
> I don't see why the consumer should lose out just because banks don't want to pay brokers big commissions any more.



I agree with you that the consumer shouldnt loose out but we can't state what our fees would be if the market goes like this until we've analyzed our operating costs. Some brokerages will have multiple offices and staff members, esb, telephone etc, to pay for, others will be small brokerages with maybe one employee. This is why I started this thread to work out whats best for the client and whats best for our company to maintain operating levels. I will say €100 would be in my opinion too little.


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## DerKaiser (18 Apr 2008)

Is this all a bit academic?  The customer ultimately pays the fee whatever way it is levied.


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## irishlinks (18 Apr 2008)

DerKaiser said:


> Is this all a bit academic?  The customer ultimately pays the fee whatever way it is levied.



But - the lowest rates for under 80% LTV (excluding short term discounts) are currently offered by NIB . 
NIB don't go through brokers - so that probably allows them a bit more scope for giving lower rates because they don't pay brokers 1% of every mortgage. 
Maybe there are other reasons they have lower rates - but not using brokers  must be a factor. So - cutting out the middlemen might result in savings for the customer?


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## euromortgage (18 Apr 2008)

Don't forget about Piba's announcement of own branded mortgages yesterday. Not finalised yet but could prove interesting for the markets


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## Sarah W (18 Apr 2008)

I'm surprised that no-one has yet mentioned that REA Mortgage Choice has been charging fees and refunding all lender commission for over 10 years. And has been voted mortgage broker of the year for the last three years.......

Sarah W

(formerly of REA Mortgage Choice)


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## Eoin28 (18 Apr 2008)

Euromortgages,

Looking at the UK market, brokers charge a fee & only receive a small .3% commission. I would think this is where the market is going. With the current cost of funds running at 4.75% its hard to see how any of the Irish banks can afford to pay an additional 1% for the business. 

If a broker is cross selling other products with the mortgage i.e. Life / Buildings / Pension. Is there a need to charge the customer?? Surely the margin on cross sales would be sufficient to maintain a profitable business?? Maybe this could be used as an incentive for the customer to purchase additional financial products??

Recent reports would suggest that brokers will shift business to lenders paying higher commission? If brokers do not change their business model, i would imagine their is a high risk of business been given to the bank paying the best commission, regardless of rate & the customers interests.


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## Eoin28 (18 Apr 2008)

Euromortgages,

Looking at the UK market, brokers charge a fee & only receive a small .3% commission. I would think this is where the market is going. With the current cost of funds running at 4.75% its hard to see how any of the Irish banks can afford to pay an additional 1% for the business. 

If a broker is cross selling other products with the mortgage i.e. Life / Buildings / Pension. Is there a need to charge the customer?? Surely the margin on cross sales would be sufficient to maintain a profitable business?? Maybe this could be used as an incentive for the customer to purchase additional financial products??

Recent reports would suggest that brokers will shift business to lenders paying higher commission? If brokers do not change their business model, i would imagine their is a high risk of business been given to the bank paying the best commission, regardless of rate & the customers interests.


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## mercman (19 Apr 2008)

As the Brokers earn a large fee when mortgages are arranged, did anyone ever hear of a Broker sending around a thank you fee for the business. No. It is their business.

I don't begrudge people making money but at the same time i know of many more needy and deserving charities.


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## MandaC (21 Apr 2008)

I did not go through a Mortgage Broker last time I moved as I got my mortgage through NIB Loan to Value and they did not deal with brokers.  However I was in the lucky position that I would have been given a mortgage by any of the lenders. 

However, the first mortgage I went for was about seven years ago, when I went with a broker who fixed me up through EBS.  My circumstances were totally different, I was struggling to obtain the amount needed for the loan and I have no doubt that I got that mortgage because of the good work the broker did for me at the time.  He did not charge a Fee, but got the commission and I have no problem with that.  If it were the case that I would have had to pay a fee of say, IR£200 going back seven years ago, I feel the work would have warranted that.

So overall, I think it depends on a.  how financially astute you are
b. if you are bothered to research the market yourself and c. if you are cutting it fine to get a large mortgage, then I feel a broker well deserves his fee.  If you need the service for any of the above reasons, I think its only fair to pay the fee.

 I can well appreciate that brokers come up with the likes of people time wasting, see how much they can borrow, etc and by charging a fee will eliminate some of that messing.

However, because certain Banks do not pay the commission, I wonder will that mean that brokers do not recommend their products and the consumer misses out on a better rate?


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## dewdrop (21 Apr 2008)

I am just wondering if a climate has built up whereby many people feel it is necessary to go the broker route for a mortgage. The Banks who do not deal with Brokers have  dedicated staff to help applicants and the various rate are published in the newspapers weekly.  I think all this hype about trackers etc made people feel inadequate.


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## regicide (21 Apr 2008)

Banks are raising their interest rates and increasing the size of the deposit required. This is going to put a squeeze on borrowers as things stand. 

On top of this, brokers may have to consider charging these same borrowers for their services ? 
A typical mortgage of 270K might mean around a €1000 broker fee do you think?

Are solicitors next in line to raise their fees ? Something has to give eventually..

reg


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## magoko101 (21 Apr 2008)

My two cents.... If there was a small flat fee then possibly but by and large I would rather do the work myself.


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## Shark Trager (22 Apr 2008)

magoko101 said:


> My two cents.... If there was a small flat fee then possibly but by and large I would rather do the work myself.


 
Totally agree,personally I would have no problem running through rates the different lenders were offering,approaching cheapest directly and getting appropriate P/w together,I do this anyway with brokers,it would just be removing the middleman,who up to now cost me nowt,
paying a percenatage to a broker?you have *got *to be kidding ,well not this poster anyway.


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## Tarquin (23 Apr 2008)

Sarah referred to REA


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## irishpancake (23 Apr 2008)

Sarah W said:


> I'm surprised that no-one has yet mentioned that REA Mortgage Choice has been charging fees and refunding all lender commission for over 10 years. And has been voted mortgage broker of the year for the last three years.......
> 
> Sarah W
> 
> (formerly of REA Mortgage Choice)



Welcome back Sarah, good to know you are keeping a watching brief 

Perhaps the fact that your ever-helpful presence, advice and good humour is missing from this board would explain why fings ain't wot they used to be on AAM. 

Surely Rea will be adversely affected also in that there will be less to refund to customers, therefore the cost of using them will be a lot higher for clients.

The Rea model is/was good, in that it was/is always transparent, and you got a full refund of any commission paid by providers to off-set the fee to Rea.


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## Camry (23 Apr 2008)

For a fee based brokerage I would look for the folliowing:

More value. I havne't used a broker, ever, because I find there is loads of free information out there and a half a dozen phone calls can get you access to what you want.

A complete overhaul of the fee structure. Brokers, in my mind, are too conflicted working on commissions. If I was to use a fee based broker, I would expect them to rebate to me any commission. I know that probably isn't feasable under current commission terms, mainly due to claw back provisions, but that is what I would want to see.


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## Sarah W (23 Apr 2008)

Being old (decrepit?) enough to have lived and worked in the mortgage business through the boom and bust of the housing market in the UK in the early 90's I think the broker market is going to suffer a similar blood-letting to the estate agency business. And it's not a bad thing. 

The people with no talent, no acumen, no value to add to the house-buying process other than to jump on the bandwagon will disappear and will not be missed. The sound businesses that are trusted, ethical and with a loyal client base will adjust to the market conditions and survive but there's no doubt it will be tough. 

(Anecdotally I recall being told in early 1991 - by a well known UK firm - that our wage cheques may or may not be honoured for the next couple of months but no-one thought to leave because they believed in the management to see it through. And they did.)

Back to the present - with lenders dithering about what they can and can't lend and at what rate from day to day - a good broker should be able to cut through the front desk bullsh*t that borrowers will be faced with and get the applicant a realistic offer an for that they should be paid an agreed professional fee.

Sarah W


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## Herb (24 Apr 2008)

I have experience of two mortgage brokers from the same company in the last 4 years. Both of them told me on different occasions that :

a) my best and only option was to go with AIB Financing. When I enquired about other lenders the second broker admitted that he had only sent my application to AIF "because they are the best". <I could have easily done that myself>
b) Both brokers pushed me to go with the max mortgage possible even though I had savings. <hmmm commission based>

So Im not too impressed with this company and if I was to buy another house today I would definitely not pay a mortgage broker for their service. I would struggle through the research and form filing myself to be happy that the banks with the best interest rates and most suited to my purchase at least receives my application. 
Unfortunately where I see 'independent advice' I read 'brokers best interest'...


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## Camry (24 Apr 2008)

It toook me two hours on the phone one morning to source what still appears the best deal on the market for my needs.


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## Libby001 (24 Apr 2008)

I can say that here and now there is no way on this wide earthly world will I be paying any broker fee if it comes into affect. I have no problem in doing the research and application forms. At the end of the day, if you are not willing to get out there and find the best deal for yourself then you are just cutting off your nose to spite your face. In this day and age with emails etc there is no reason why people can't do it for themselves. And if it means saving a few bob I have no problem in doing so. I cant believe people are actually considering this. Do we pay fees to brokers for Car insurance? life assurance ?? If we start paying fees to mortgage brokers, the other lot will soon jump on the band wagon. Mortgage brokers have had the high life for way too long in this country, and have been making a fortune on commission from banks and now when things are getting a bit tight, they haven't a clue how to run their business during bad times so will come up with some other way of doing people out of money. 

Next thing I will hear is that estate agents are going to start charging us to view a house!!!!!


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## roland (25 Apr 2008)

Libby001 said:


> I can say that here and now there is no way on this wide earthly world will I be paying any broker fee if it comes into affect.


 
The question 'would you be willing to pay a broker fee' is stunning in its naivety. This naivety is only reinforced by all the respondents arguing whether they would pay a fee or not. Der Kaiser hit it on the head. The pure fact is that the consumer HAS ALWAYS paid a fee to the broker. It's just that up to now it has been hidden in the interest rate they are paying. How on earth else did you think the broker got paid? The fairies? The banks out of charity? The pure fact is that the bank has a fixed pie to share out between the seller and the consumer. Up to now the bank has paid 1% to the broker and then after that worked out what interest rate they could give to the consumer. So now that the cost of funding for the bank has gone up about 1% they have a dilemma. They have 1% less to play around with. So, what would you do? Well 1% is a load to make up quickly so a bank isn't going to put that straight away on either the customer or the broker. If they did, then they would probably get no business 'cos neither joe soap nor mortgage broker could adjust that quickly. For example, if they covered it by reducing broker commission by 1% that would mean they end up paying nothing to the broker. Err that's not very clever 'cos now why would a broker pass business to a bank for nothing at all? Charity? If instead the banks pass it all on to the consumer, then the consumer is scratching their head at the massive increase 'cos ECB rates haven't moved at all!! Not so clever either. So, what is a bank to do? After much scientific calculations ..... split the difference. They pass on 0.5% of the problem to the broker (i.e. reduce broker commission by 0.5%) and the rest to the consumer. 

Let's get one thing straight. The fact that a bank has to pay a broker (whether it's 1% or 0.5%) means that the interest rate they give you on your mortgage is higher than it otherwise would be. The only person paying for that is you. It's a nonsense to believe or think otherwise. If banks did not have to pay 1% to brokers would competition not ensure that the interest rates consumers paid were a lot lower? The fee or no fee debate is a nonsense. The only thing that's happening now is that the cost of advice from your broker is now being made more transparent. The fact that people are 'shocked' by a 0.5% fee is very telling. I'd say they would be even more shocked if they knew that up to now they paid the 1% to their broker through inflated interest rates on their mortgage - how on earth else did they think the broker was paid?


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## Sarah W (25 Apr 2008)

Nice theory Roland but incorrect. Sourcing a mortgage (advertising, interviewing, advising) and processing it (collecting, chasing and checking paperwork) takes man hours, technology, office space, phone and postage costs, etc, etc. All these incur a cost which is paid by the bank to the broker as a commission. Given that brokers produce 50% of Ireland's mortgage applications how much extra in terms of staff (recruitment, salaries, training), premises and ancillary costs would the banks have to pay to bridge the gap if that source disappeared? And at what cost to the consumer in terms of independent advice?

Sarah W


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## irishlinks (25 Apr 2008)

But ... up to now the only lender not going through brokers was NIB - and they have the lowest rates (under 80% LTV anyway).  So maybe cutting out brokers does result in lower rates?  It doesn't take much advice to tell me that 4.8% is lower than 5% ?


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## LDFerguson (25 Apr 2008)

Libby001 said:


> I have no problem in doing the research and application forms. At the end of the day, if you are not willing to get out there and find the best deal for yourself then you are just cutting off your nose to spite your face. In this day and age with emails etc there is no reason why people can't do it for themselves.


 
If you want to, you can also save money by avoiding trips to the G.P., by sourcing all the medical information that's out there on the internet and diagnosing yourself.  Some people would prefer to have an experienced professional explain the finer points to them that an amateur wouldn't be aware of.  



> Do we pay fees to brokers for Car insurance? life assurance ??


 
Do you think that you get them for free?



> ...so will come up with some other way of doing people out of money.


 
Being a broker, though not exclusively a mortgage broker, I take exception to this.  Nobody ever dragged a customer into a broker's office.  There has always been the option for people to bypass brokers and deal directly with lenders.  So if brokers have been "doing people out of money", why did more people take out mortgages through brokers than directly with lenders?


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## Jimbobp (25 Apr 2008)

Here here Liam. I'm a broker so don't want to be seen to be starting the broker persecution society,but I'm not sure why brokers attract these types of comments.For instance I've compared our motor quotes to those that the regulator post on their website, in almost every scenario we are cheaper than the direct companies even with our admin charge & commission included, because we have access to companies/schemes that the public don't. I've also lost count over the years of the amount of claims we've gotten through that the client would have had 0 chance of getting if they were insured direct with a company.Maybe I'm been a bit sensitive - sniff


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## irishpancake (25 Apr 2008)

irishlinks said:


> But ... up to now the only lender not going through brokers was NIB - and they have the lowest rates (under 80% LTV anyway).  So maybe cutting out brokers does result in lower rates?  It doesn't take much advice to tell me that 4.8% is lower than 5% ?



How come some of the brokers and ex-brokers on the board will not address _irishlinks_ point regarding NIB.

One broker has actually argued that Halifax rates are lower than NIB rates for people with LTV's 50%-80%.

see here


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## Rightly dun (25 Apr 2008)

I don’t want to bring my own problems with my Broker onto this thread but this is what happened to me.
My Broker arranged my loan and didn’t tell me about that the bank were going to charge me an arrangement fee of 5,000 euro, which I only found out after I had drawn down the money. If that was not bad enough because of my problems I changed banks as I thought that broker was still getting commission. I just walked into my bank and asked if they would take on this loan interest only ,No problem. What shocked me then is that even after two interest rate hikes the new loan was costing me 500 euro a month less. 
So without saying to much Brokers you can xxxx xxx from me.


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## LDFerguson (25 Apr 2008)

irishlinks said:


> But ... up to now the only lender not going through brokers was NIB - and they have the lowest rates (under 80% LTV anyway). So maybe cutting out brokers does result in lower rates? It doesn't take much advice to tell me that 4.8% is lower than 5% ?


 


irishpancake said:


> How come some of the brokers and ex-brokers on the board will not address _irishlinks_ point regarding NIB.


 
Despite the question marks, I can't see a question to be answered in irishlinks post.  It appears rhetorical to me. 

I fully agree that National Irish Bank's LTV tracker variable mortgages are cheaper than any other trackers on the market at present, for those who qualify for them. I don't know if this is solely because they don't pay commission to brokers. I'd imagine it also has something to do with their source of funding - presumably via Danske Bank. It probably also has something to do with their very selective lending policy - these rates are only available to those seeking <80%, no re-financing of other loans, no self-builds, no investment property etc.



irishpancake said:


> One broker has actually argued that Halifax rates are lower than NIB rates for people with LTV's 50%-80%.
> 
> see here


 
One broker was wrong and you corrected him. What's your point here?


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## clubsandwich (26 Apr 2008)

Rightly dun said:


> I don’t want to bring my own problems with my Broker onto this thread but this is what happened to me.
> My Broker arranged my loan and didn’t tell me about that the bank were going to charge me an arrangement fee of 5,000 euro, which I only found out after I had drawn down the money. If that was not bad enough because of my problems I changed banks as I thought that broker was still getting commission. I just walked into my bank and asked if they would take on this loan interest only ,No problem. What shocked me then is that even after two interest rate hikes the new loan was costing me 500 euro a month less.
> So without saying to much Brokers you can xxxx xxx from me.



I find this post quite unbelievable to be honest. You say a bank charged you an arrangement fee of €5,000 and you allege that the broker did not make you aware of this. You then say that you only found out after you drew down the funds! First off, unless it was a small commercial deal I don't know of any lender who would charge an arrangement fee of this size. The subprime lenders charge a max of €1,800 except for GE. An arrangement fee would have been highlighted on the loan offer you signed and should have been noticed by your solicitor and also by yourself (simply not good enough to blame the broker while not mentioning the solicitor or your own negligence in not being aware of what you were signing!)

Was your's a sub prime mortgage?


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## Rightly dun (27 Apr 2008)

*Clubsandwich *sorry you are somewhat right it was in the loan offer and it was a commercial loan, but I trusted this Broker and if you have seen my thread you will already know that this guy fxxxed off with 442,000 euro of that loan and I’ve been paying over 2,000 euro a month ever since (July 2004). So I still owe the 490,000 that I first got and I have already paid over 100,000 in interest. Again sorry I don’t want to paint every Broker with the same brush, but I do use Brokers to save time but they don’t really save me money. I don’t know how times I’ve got that standard letter, you know the one that says We have looked around for you and this is the best quote we can find, only to make one phone call and get it 15-20% cheaper somewhere else.


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## irishpancake (27 Apr 2008)

LDFerguson said:


> Despite the question marks, I can't see a question to be answered in irishlinks post.  It appears rhetorical to me.
> 
> I fully agree that National Irish Bank's LTV tracker variable mortgages are cheaper than any other trackers on the market at present, for those who qualify for them. I don't know if this is solely because they don't pay commission to brokers. I'd imagine it also has something to do with their source of funding - presumably via Danske Bank. It probably also has something to do with their very selective lending policy - these rates are only available to those seeking <80%, no re-financing of other loans, no self-builds, no investment property etc.
> 
> ...



My point is that this broker, who provides a good web-site, and blog, was prepared to admit he was wrong only when challenged by someone who had the figures and facts to prove hom wrong.



> The point I was making was that you were comparing one bank’s(NIB) APR rates with the nominal rates quoted by another Bank (Halifax).
> 
> This will obviously have the effect of making the NIB rates look higher than those for Halifax. This I still believe is misleading to make an unfair point, i.e. “there are rates out there which are cheaper than NIB’s LTV rates”



How many qualifying customers going to a broker would just accept the brokers word and go with his recommendation, even though there is now and has been for some time a better alternative for qualifying customers, i.e. NIB's LTV Tracker Mortgage? 

I think the source of NIB's funds is irrelevent to the qualifying customer.


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## irishlinks (27 Apr 2008)

LDFerguson said:


> If you want to, you can also save money by avoiding trips to the G.P., by sourcing all the medical information that's out there on the internet and diagnosing yourself.  Some people would prefer to have an experienced professional explain the finer points to them that an amateur wouldn't be aware of.



I think comparing mortgage brokers with GP's is going a bit far. 
Comparing mortgage rates from about 15 sources to find the best for a borrower is a good bit different to the skills and knowledge required by a doctor -  skills that will have taken at least 6 years of training.


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## LDFerguson (28 Apr 2008)

irishpancake said:


> My point is that this broker, who provides a good web-site, and blog, was prepared to admit he was wrong only when challenged by someone who had the figures and facts to prove hom wrong.


 
Not disputing this.  You corrected one broker.  That's between you and him as far as I'm concerned.  I don't even know him.  



> How many qualifying customers going to a broker would just accept the brokers word and go with his recommendation, even though there is now and has been for some time a better alternative for qualifying customers, i.e. NIB's LTV Tracker Mortgage?


 
If a customer goes to a broker they must be advised pre-sale which lenders the broker deals with.   



> I think the source of NIB's funds is irrelevent to the qualifying customer.


 
Not disputing this either.  The post by irishlinks asked a rhetorical question about whether or not NIB's LTV mortgage rates were a result of their decision to pay no commission to brokers.  When you were looking for a response, I noted that it might be this, or several other factors.


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## LDFerguson (28 Apr 2008)

irishlinks said:


> I think comparing mortgage brokers with GP's is going a bit far.
> Comparing mortgage rates from about 15 sources to find the best for a borrower is a good bit different to the skills and knowledge required by a doctor - skills that will have taken at least 6 years of training.


 
The skills and knowledge may be different but my point is that a good broker will do an awful lot more than simply compare rates for a customer.  If a customer wants a tracker variable rate and has an LTV of less than 80% and qualifies under NIB's criteria, the choice is simple.  NIB.    

But if not, how does a "non-financial" person evaluate the long-term differences between, say two 2-year fixed rates where the rate for two years is the same?

Or how does a "marginal" client who doesn't qualify for the requested amount with all lenders know which lenders to approach and how to present their information?


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## irishlinks (28 Apr 2008)

LDFerguson said:


> Or how does a "marginal" client who doesn't qualify for the requested amount with all lenders know which lenders to approach and how to present their information?



How can someone "present" their information" differently? Are you saying that maybe brokers get clients to provide false information?  

We could spend ages discussing the pros and cons of brokers. The original question was would we be willing to pay a fee. Personally no - but my view is that they are needed by some people and in the ideal world - lenders would give no commission and brokers would charge a flat fee for finding the best mortgage for a client.


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## John Rambo (28 Apr 2008)

Liam, nobody is questioning your integrity...you are a valuable contributor to AAM. However, there is no doubt whatsoever in my mind that there are brokers selecting the mortgage which will yield the most commission for clients. Equally, there are brokers organising fake P60's and the like to help clients get bigger mortgages (and I'm not necessarily saying this is a bad thing) I think mortgage brokers are similar to travel agents in that they are becoming obsolete. Yes, there is still a niche for very specific business where advice is required but in any market the middle man's position is always pretty tenuous.


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## LDFerguson (28 Apr 2008)

irishlinks said:


> How can someone "present" their information" differently? Are you saying that maybe brokers get clients to provide false information?


 
No, but a broker may have the experience to know what additional information to provide to the lender in order to help the application.  

Example - currently dealing with a mortgage application for a self-employed professional.  Standard documentary requirement is two years audited accounts.  One of the most recent years had a major dip in net profit due to extraordinary circumstances.  If she simply sent in the bog-standard two years, the lender would in all likelihood take an average of the two years and conclude that she couldn't afford the requested mortgage.  We sent in four years audited accounts and an explanation of the extraordinary once-off charges in her accounts with evidence that they were once-off in nature.  Mortgage approved.   



> We could spend ages discussing the pros and cons of brokers. The original question was would we be willing to pay a fee. Personally no - but my view is that they are needed by some people and in the ideal world - lenders would give no commission and brokers would charge a flat fee for finding the best mortgage for a client.


 
I'd agree that if you're happy with your own abilities to choose and arrange your own mortgage, there's certainly little or no incentive for you to pay a fee to a broker to do it.  

I've already made up my own mind as to whether or not we'll be charging a fee going forward, but I'm not posting my decision here or on my own website until after a couple of meetings with representative bodies etc.


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## LDFerguson (28 Apr 2008)

John Rambo said:


> Liam, nobody is questioning your integrity...you are a valuable contributor to AAM. However, there is no doubt whatsoever in my mind that there are brokers selecting the mortgage which will yield the most commission for clients. Equally, there are brokers organising fake P60's and the like to help clients get bigger mortgages (and I'm not necessarily saying this is a bad thing) I think mortgage brokers are similar to travel agents in that they are becoming obsolete. Yes, there is still a niche for very specific business where advice is required but in any market the middle man's position is always pretty tenuous.


 
Thanks John, 

I genuinely wasn't fishing for compliments.  While I agree that, like in any industry, there are undoubtedly rogue brokers out there who will falsify documentation, place business with lenders offering maximum commission etc., I believe that they are in the minority.  I hope I'm not being naive.  

I suppose in any thread like this, there will always be posts along the lines of "I had a bad experience with a broker therefore all brokers are dodgy charlatans or worse and best avoided."  I'll generally wade in to defend my own industry against such generalisations as I know that there are plenty of honest professionals out there, who add value.


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## Sarah W (28 Apr 2008)

One thought has just struck me - how many bank employed mortgage advisers (or general bank staff for that matter) regularly post impartial, expert and free advice on AAM in the way that Liam has for so many years? I really, really think that the demise of customer driven independent advice - be it for mortgages, travel or any type of insurance - would be to the huge detriment of all consumers.

Sarah W.


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## Thomas22 (29 Apr 2008)

I think most people would be willing to pay a fee for a mortgage broker as it can be a valuable service.

 The problem is it wouldn't be anywhere close to what you currently get.
The average mortgage must be around €300k so with 1% commission that equates to around €3,000. There isn't a chance in hell I would pay anything close to that for the services currently offered by brokers. Max I would pay at the moment is €250.

Can brokers survive on these margins?


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## LDFerguson (29 Apr 2008)

Thomas22 said:


> I think most people would be willing to pay a fee for a mortgage broker as it can be a valuable service.
> 
> The problem is it wouldn't be anywhere close to what you currently get.
> The average mortgage must be around €300k so with 1% commission that equates to around €3,000. There isn't a chance in hell I would pay anything close to that for the services currently offered by brokers. Max I would pay at the moment is €250.
> ...


 
Don't forget that commissions haven't been abolished.  In the worst cases they have been halved.  In others, they have been reduced by a lower margin.  So the question is not if a broker could survive on €250 per mortgage, but if they could survive on 0.5% or perhaps more.


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## demoivre (30 Apr 2008)

LDFerguson said:


> Don't forget that commissions haven't been abolished.  In the worst cases they have been halved.  In others, they have been reduced by a lower margin.  So the question is not if a broker could survive on €250 per mortgage, but if they could survive on 0.5% or perhaps more.



Personally would prefer to see all  lenders pay the *exact* same commission to brokers . Ulster bank is no longer selling mortgages through brokers and NIB never did so you have to research those lenders' products yourself. Substantially different commission rates paid by the other lenders to brokers may well jeopardize the public's view of the brokers willingness to impart independent advice imo.


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## Thomas22 (30 Apr 2008)

LDFerguson said:


> Don't forget that commissions haven't been abolished.  In the worst cases they have been halved.  In others, they have been reduced by a lower margin.  So the question is not if a broker could survive on €250 per mortgage, but if they could survive on 0.5% or perhaps more.



I thought the question was would i be willing to pay a fee and i said yes and gave an amount . If the question is would i be willing to pay a fee on top of the lower commission the broker now receives then the answer is a definite NO. If commissions aren't equal across the board then i can't see how brokers can remain neutral as it is very likely that banks with the lower rates for me will also have the lowest commissions for the broker.


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## irishpancake (30 Apr 2008)

LDFerguson said:


> Don't forget that commissions haven't been abolished.  In the worst cases they have been halved.



Have Ulster Bank not abolished Broker Fees altogether by ceasing to sell mortgages through Brokers?


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## money man (30 Apr 2008)

Unfortunately i have to agree with Demoivre... what chance has a client of getting impartial advice from a broker who gets 1% commission from some banks, .5% commission from other banks and cannot offer other banks mortgages (often the most competitice e.g NIB) at all?

A broker is going to be left with those who have greatest risk attached and who need biggest loan to value. 

I would say that for some reason or other Irish people do not want to pay for independent impartial advice and prefer instead to come to ask about money for their advice. I dont know why more people dont seek professional, independent financial advice on matters like mortgages etc and just have commissions refunded to them. That way they could make up their mind on all products / most suitable products available to them instead of whichever ones give the broker the best commission or are available to them.


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## MortgageGuy (8 Jul 2008)

be sure to thank a broker even if you have an NIB loan, NIB are often touted as 'best value in the market' actually 50-70% of all people are on variable rates and that goes for NIB's book as well! their variable is about the worst there is, so really their customers on the higher rate (who are usually not financially literate) are subsidising those on the good rates. 

but i digress, why thank a broker if you are an NIB customer on a good tracker? because brokers actually brought tracker mortgages into this country, go back in time and look at NIB's proposition before the dawn of trackers and it will tell you an interesting story. 

NIB only brought out trackers due to market competition that was created because of brokers, there is a lot of anti-broker sentiment, that's o.k. but you can't have a tracker mortgage and not like brokers, trackers after all, only exist because of brokers


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