Any such thing as true discount brokers for mortgages?

D

darag

Registered User
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I found this thread quite interesting. The impression I always had was that REA offerred a fee based service for mortgages (and other products). From what I can figure out, for small mortgages this is still the case but in general (given current house prices) really they offer subsidised legal services.

For nearly all other financial products, there seem to be brokers who will provide an execution-only service for a fixed fee. However nobody is doing this for mortgages. I'd imagine that a 2K (for example) execution-only service (with a refund commission) for mortgages would be a winner with the more discerning public and quite easy an easy line of business for brokers.

I'm curious why nobody is offering this?
 
Yes, but it's rather meaningless if the fee charged varies in line with the commission the broker would have earned. With other financial products, an "execution-only" or "discount" service means the service is provided for a fixed fee so effectively the broker doesn't rely on commission at all. With REA, you pay a fee which matches the commission which, to me, is effectively the same as foregoing the commission. Ok so REA pay some of your legal fees but others such as easymortgages and primafinance do the same. I don't want ot come across as knocking REA - their package is good value - but it's not really a "fee based" service in the traditional sense as described above.
 
Darag,
Very interesting idea - What do you think would reperesent a good "flat fee" for this service?
 
Munsterdude, one problem with the idea is that, as far as I know, mortgage commission rates are not public knowledge which they'd need to be to allow the punter to make an informed decision. However, from what I can gather, most providers pay about 1% of the value of the mortgage as commission to brokers. I mentioned 2k off the top of my head for an execution only service as I think it would still be very lucrative for a broker (given that the level of service would be much less - they could conduct their business over the phone and using post) while offerring savings for many borrowers given the current average house prices. Maybe it's being overly cynical but I suspect that if any broker tried to offer such a service, many of the institutions would probably be reluctant to deal with them for fear of pissing off their existing broker network.
 
Well REA certainly annoyed the broker network by disclosing and refunding commission but we deal with all the lender bar Irish Nationwide and National Irish, we lent €242mill in 2005 and we just won "Mortgage Broker of the Year" so I guess the lenders will put up with us for a bit longer yet!

:D

Sarah

www.rea.ie
 
So with rea if you borrow 500,000 do they charge 5,000 euro and then refund you the 5,000 commission?
 
doberden said:
So with rea if you borrow 500,000 do they charge 5,000 euro and then refund you the 5,000 commission?
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Up until January the fee for a mortgage of €500,000 would have been €4995 + VAT or €6043.95 to include the solicitors professional fees for the conveyancing (but excluding outlays) and a refund of €5000 within 90 days of completion hence a net cost of €1043.95 + outlays.

We have now simplified the process/fee to €499 + VAT (€603.79) for the legal fees which a. reduces the cost to the client and b. means the client is not waiting up to 90 days to get their refund.

Sarah

www.rea.ie
 
darag said:
Munsterdude, one problem with the idea is that, as far as I know, mortgage commission rates are not public knowledge which they'd need to be to allow the punter to make an informed decision. However, from what I can gather, most providers pay about 1% of the value of the mortgage as commission to brokers. I mentioned 2k off the top of my head for an execution only service as I think it would still be very lucrative for a broker (given that the level of service would be much less - they could conduct their business over the phone and using post) while offerring savings for many borrowers given the current average house prices. Maybe it's being overly cynical but I suspect that if any broker tried to offer such a service, many of the institutions would probably be reluctant to deal with them for fear of pissing off their existing broker network.
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As you mentioned - most banks pay 1% comission. You are right - a flat fee of €2K and then a commission refund would be very lucrative. Do you think many people would pay the €2K up front, in full confidence that they will recieve a full commission refund? I dont think you are correct about banks not willing to deal with a broker who did this. I suspect the banks couldnt care less! (As long as the broker was submitting good quality and volume!) As you probably gather I am a broker. I would be very happy to conduct my business in this method, but I suspect not many would be willing to stump up, or indeed in the case of first time buyers, may not have the abilityto stump up c€2K for the service. Might be wrong on this though!
 
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