Minimum loan amount required to get tracker rate?

[ClubMan]

Clubman, why do you recommend not going to a broker? In what way does a broker act as a middleman? How can you save money by avoiding a broker? I am very curious!

I didn't offer a blanket recommendation that people avoid brokers. I just suggested that some people might consider shopping around independently. This is what I did anyway. Brokers are obviously middlemen since they liaise between the lender and the borrower. A broker may not deal with all lenders but an individual can approach them all themselves. The broker must be remunerated in some way for the services that they provide so if this is by the individual they may be save by shopping around independently. There are other factors to be considerer - e.g. some brokers refund commissions, some may be able to get a higher LTV than the individual, some may offer useful advice. By all means use a broker but only after you understand the costs/benefits and pros/cons involved.

 

[MissRibena]

how do i fnd out who the local civil engineer is? Is this a silly question cos I've no clue where to look!!

Ah now hjrdee, you'll want us to be build it for ya next

I'd say look in your Golden Pages. Or better yet, ask around locally for recommendations. Local knowledge, tips and recommendations are probably what you need and to get that you will need to be a bit brave/cheeky and just ask people. Chat people in the planning office and ask them a million questions too. I think there is a website for members of an institute of civil engineers but I can't for the life of me find it on google now.

Rebecca

 

[hjrdee]

thanks missribena, I'll try planning office. And if you need a job I might need a labourer in the near future!

 

[Munsterdude]

I didn't offer a blanket recommendation that people avoid brokers. I just suggested that some people might consider shopping around independently. This is what I did anyway. Brokers are obviously middlemen since they liaise between the lender and the borrower. A broker may not deal with all lenders but an individual can approach them all themselves. The broker must be remunerated in some way for the services that they provide so if this is by the individual they may be save by shopping around independently. There are other factors to be considerer - e.g. some brokers refund commissions, some may be able to get a higher LTV than the individual, some may offer useful advice. By all means use a broker but only after you understand the costs/benefits and pros/cons involved.

Clubman,
Fair point on some of the above.(Namely in relation to brokers not dealing with all the lenders, refunding commissions, higher LTV's, advices etc) BUT I think that in reality, most brokers get paid from a finders fee from the lender. This is almost uniformly 1%. This does not come from the customers pocket. The bank pay for it. In general there is no cost whatsoever to the customer.
Obviously I am concerned about perceptions out there, as I am a broker. I would be very curious about peoples experiences in dealing directly V's via a broker? Any views people?

 

[ClubMan]

This is almost uniformly 1%. This does not come from the customers pocket. The bank pay for it. In general there is no cost whatsoever to the customer.

I'd imagine that this cost (broker remuneration) is recouped from the customer in some way - e.g. through an additional margin on the rates charged? Perhaps somebody has information about which lenders pay the highest broker remuneration and can correlate these to the rates charged to the customer?

Obviously I am concerned about perceptions out there, as I am a broker. I would be very curious about peoples experiences in dealing directly V's via a broker? Any views people?

Just to clarify, my comments are in no way pejorative against brokers in general in case you are concerned about that.

When I bought a house c. 1995 I tried a few brokers but wasn't that impressed and I ended up shopping around independently for the mortgage, life assurance and home insurance. I would recommend anybody with a little financial knowledge, time and inclination to do likewise. Among other things it's a useful learning exercise.

 

[Munsterdude]

I'd imagine that this cost (broker remuneration) is recouped from the customer in some way - e.g. through an additional margin on the rates charged?


.

Absolutly not ! that's the whole point! Lenders get the deals directly from the brokers, dont have to have a sales team, less costs for them. The broker WILL get you the sharpest price possible. Tell me where the addtional costs to the client can come from?

 

[ClubMan]

Absolutly not ! that's the whole point! Lenders get the deals directly from the brokers, dont have to have a sales team, less costs for them.

The lender must cover the cost somehow. I am not saying that they load broker customers over non broker customers. I am suggesting that they build this cost of sales into the margin that they charge as a matter of course. This would seem, to me, to be normal business practice. Can you show that this is not the case?

The broker WILL get you the sharpest price possible.

If that is the case then all brokers would be recommending the same lender in each (loan size, LTV ratio etc.) category every time and I don't think that this is the case. Again if you can show otherwise I'd be very interested.

Tell me where the addtional costs to the client can come from?

The opportunity cost of being sold a mortgage which is not the cheapest in the relevant category thereby facing higher interest costs than necessary? We have seen first hand accounts of this happening here on AAM in the past.

To turn your question around, perhaps you can explain to me what benefit - in terms of cost - a broker is when an individual can simply choose the cheapest mortgage rate that matches their needs from existing lists such as this?

 

[Munsterdude]

Clubman,
I love a good debate, and I am glad to be able to answer your questions (hopefully!!!)
1) The lender must cover the cost part.
The lenders by paying brokers are covering there costs - indirectly. They have little costs in getting the business, - they dont pay sales staff, expensive marketing, etc to source the business. Broker business is "cheap" business. They either are happy to take the mortgage or they are not. As you no doubt are aware, banks are under huge pressure to get volumes of business, hence they are happy to deal with brokers. (Most of the banks anyway) In summary, it is finacially worth their while, to get "cheap" business from brokers. Paying the commission ofsets the costs of sourcing the business.

The lender must cover the cost somehow. I am not saying that they load broker customers over non broker customers. I am suggesting that they build this cost of sales into the margin that they charge as a matter of course. This would seem, to me, to be normal business practice. Can you show that this is not the case?
Yes! I get the exact same rates (and often better) that you have listed in the best buys section. How else would I get customers, if what I am charging is more expensive than that they can get themselves? I would be out of business in a week! I am glad to say that the proof that I am not passing on higher margins, is the fact that my business is doing well!!!



If that is the case then all brokers would be recommending the same lender in each (loan size, LTV ratio etc.) category every time and I don't think that this is the case. Again if you can show otherwise I'd be very interested.
In my experience, no two loans are the same. If the loans were the same, I would recommend the exact same bank, ie the one that was best value. Simple. In real life, what appear to be small diferences in various mortgage aplications can have a significant influence in the lender that suits the customer best. Remember, it is not always price that decides which lender to deal with.



The opportunity cost of being sold a mortgage which is not the cheapest in the relevant category thereby facing higher interest costs than necessary? We have seen first hand accounts of this happening here on AAM in the past.
See my point above.

To turn your question around, perhaps you can explain to me what benefit - in terms of cost - a broker is when an individual can simply choose the cheapest mortgage rate that matches their needs from existing lists such as this?
I would be glad to!
1. I can get a customer the same, if not better, prices than listed here. Fact. I can verify this to you, but I certainly wont post it on a public website like this. If you want real examples I can show you.
2. Product knowledge - for example I can save a customer money through my product knowledge. For example do many people here know where you can get a car loan at 3.1% guaranteed? I do - and I have helped plenty to organise there finances in the cheapest manner possible.
3. Opportunity costs - associated with getting mortgage approval, cheque issue, and other related matters. We deal with lenders all day every day. It our job. I can save customers hours or days of messing around with lenders during the whole house buying/remortgage process.
Does this answer some of your queries?

 

[ClubMan]

The lenders by paying brokers are covering there costs - indirectly. They have little costs in getting the business, - they dont pay sales staff, expensive marketing, etc to source the business. Broker business is "cheap" business. They either are happy to take the mortgage or they are not. As you no doubt are aware, banks are under huge pressure to get volumes of business, hence they are happy to deal with brokers. (Most of the banks anyway) In summary, it is finacially worth their while, to get "cheap" business from brokers. Paying the commission ofsets the costs of sourcing the business.

Yes - but, regardless of the fact that remunerating a broker may be cheaper than paying direct sales people, it is still a cost to the lender and they presumably must recoup this in some way - most likely as part of the margin that they charge on their rates. To say that the remuneration paid by the lender to the broker represents no cost to the borrower is not realistic as far as I can see since this cost must be recouped by the lender somehow - whether directly or indirectly.

 

[Munsterdude]

Yes - but, regardless of the fact that remunerating a broker may be cheaper than paying direct sales people, it is still a cost to the lender and they presumably must recoup this in some way - most likely as part of the margin that they charge on their rates. To say that the remuneration paid by the lender to the broker represents no cost to the borrower is not realistic as far as I can see since this cost must be recouped by the lender somehow - whether directly or indirectly.

This is not the case clubman - If you get a 2.95% tracker Directly from Ulster Bank, or from Ulster Bank through me, you are still charged the same. If I get you an offer letter at an apr of x% how can it be anything other than that? How can the bank "get you" on some other charges?
You know how repayment tables work - over the average term of a loan, a customer is going to repay significant money above and beyond the principal. For example if you take out a loan of €100K for 20 years, at 3% you pay the bank back over of €133K. Effectivly what the lenders are doing is foregoing their profit for the first year or so, knowing that they will clear profits in later years.

 

[ClubMan]

This is not the case clubman - If you get a 2.95% tracker Directly from Ulster Bank, or from Ulster Bank through me, you are still charged the same.

Interesting that you, as a broker, quote UB as an example when they are not the cheapest in the relevant category. In this case I could go direct to NIB and get a 2.79% (2.80% APR) tracker which betters the UB tracker rate of 2.95% (3.00% APR) that you quote. This would seem to be an example of what I mentioned earlier: a broker recommended rate that, while no dearer than what a direct customer would get, is not necessarily the most competitive on offer. In this case if a broker recommended UB to a lender then the borrower would pay dearly for this in the long run in the form of additional interest costs that the could have avoided by shopping independently for the most competitive rate on offer.

 

[Munsterdude]

Interesting that you, as a broker, quote UB as an example when they are not the cheapest in the relevant category. In this case I could go direct to NIB and get a 2.79% (2.80% APR) tracker which betters the UB tracker rate of 2.95% (3.00% APR) that you quote. This would seem to be an example of what I mentioned earlier: a broker recommended rate that, while no dearer than what a direct customer would get, is not necessarily the most competitive on offer. In this case if a broker recommended UB to a lender then the borrower would pay dearly for this in the long run in the form of additional interest costs that the could have avoided by shopping independently for the most competitive rate on offer.

What? I made absolutly NO RECCOMENDATION It was an example!!! Are you for real on this?
I think what I have said is perfectly reasonable. How can you possibly come to the conclusion above from what I have said? I really hope you are joking.

 

[ClubMan]

My comment included some equivocation on this:

This would seem to be an example of what I mentioned earlier...

Rightly or wrongly I simply inferred some significance from the fact that you used UB as an example. You are free to clarify matters if I was mistaken.

 

[Munsterdude]

My comment included some equivocation on this:



Rightly or wrongly I simply inferred some significance from the fact that you used UB as an example. You are free to clarify matters if I was mistaken.

Clubman,
You did a lot more that simply infer. I used Ulster Bank as an example. I could have used any bank - that is not the point though. It was an example, and you deliberatly chose to use my example as if i made some sort of recomendation to the world to choose Ulster Bank as a Lender!
What is worse, from the example I choose to use, you managed gave a clear message at to your personal view on brokers -
"In this case if a broker recommended UB to a lender then the borrower would pay dearly for this in the long run in the form of additional interest costs that the could have avoided by shopping independently for the most competitive rate on offer"
Nobody made any recomendations, yet you turn this into a fine example of a broker screwing the general public! I am astonished. You are a moderator on this site, I assume your function is to promote/monitor open debate and independant opinion, while you yourself obviously have a very one eyed view. I look forward to your apology, which I am sure will be shortly recieved.

 

[ClubMan]

I don't see what I have to apologise for. I explained how/why I made an inference. I did not say that you recommended UB - I said that it seemed to be a case of what I was referring to earlier. If this was incorrect then I accept your correction/clarification and stand corrected. I never claimed that you or most/all brokers were screwing the general public (I never used the word "screwing" at all). I have no problems with brokers and have no problem with them offering a service and earning a living. I just feel that many people don't really need their services when shopping around for the likes of mortgages and related products especially when they can simply refer to best buys lists and go directly to the most competitive providers.

By the way, my moderator status has no real bearing on my involvement in the normal cut and thrust of discussions.

 

[Munsterdude]

I don't see what I have to apologise for. I explained how/why I made an inference. I did not say that you recommended UB - I said that it seemed to be a case of what I was referring to earlier. If this was incorrect then I accept your correction/clarification and stand corrected. I never claimed that you or most/all brokers were screwing the general public (I never used the word "screwing" at all). I have no problems with brokers and have no problem with them offering a service and earning a living. I just feel that many people don't really need their services when shopping around for the likes of mortgages and related products especially when they can simply refer to best buys lists and go directly to the most competitive providers.

By the way, my moderator status has no real bearing on my involvement in the normal cut and thrust of discussions.

There is clearly no point in argueing with you on this one. If you want to split hairs about "seemed" and infered, fire away. You have totally misrepresented what I said, and meanwhile managed to get away from my basic point, which is that by dealing with a broker, you can get the best prices out there. You seem unwilling to accept that this is the case.

 

[shulgin1000]

I have gone through a broker and am very happy with the service provided. However, for the proportion of people who have the ability to do a bit of research and the time to shop around - there is no need for a broker.
You say that the bank pay the broker a finders fee - but this has to be paid ultimately by someone - that someone being the customer.
The only reason I went with a broker is because he agreed to split the commission.

 

[Munsterdude]

I have gone through a broker and am very happy with the service provided. However, for the proportion of people who have the ability to do a bit of research and the time to shop around - there is no need for a broker.
You say that the bank pay the broker a finders fee - but this has to be paid ultimately by someone - that someone being the customer.
The only reason I went with a broker is because he agreed to split the commission.

Shulgin 1000,
Glad to hear you have a positive experience of a broker - I wonder what the general consensus on dealing with brokers is. I have a suspicion that it may not be great. Naturally I would disagree with the no need for a broker comment! I feel that a good broker can obviously save you time and a bit of hassle with shopping around - but can also get you a better deal. I argue/hassle lenders for better prices on a daily basis. Its my job.
In relation to your point that someone ultimatly has to pay for the brokers finders fee is true. Ultimatly it is the customer, BUT not in the way that most people think. I mentioned below that a bank makes good money from mortgages - in the example I used below, on a €100K loan the bank makes c€33K - that is where the fee is paid from. BUT if you dont go to a broker, you are going to pay that money to the bank regardless. i.e. you wont pay less for going directly to a bank. Does this make sense to you?

 

[shulgin1000]

Si.e. you wont pay less for going directly to a bank. Does this make sense to you?

It does - and in my case i paid less going the broker route - but it seems insane to me that this is the case. Logic should dictate that a better economy of scale/lower cost base should result in gains for both the customer and lender. Course, irish lenders have other ideas - but one can only be optomistic that these fat margins will be eroded as the market is made more competitive.

Your example elaborates on the services of a good ethical broker - (i'm reasonably confident mine is) but like everything in life, there are variables - and there are plenty of unscrupulous types in your profession also.

 

[Munsterdude]

Indeed - you probably got the best of both worlds I suppose (in relation to your broker) I agree with you it is an odd way to go about things.
The only thing in relation to bank margins is - if you think it is bad now, it has improved significantly in the last number of years. I think that perhaps we will end up with an american style mortgage market in a few years - most people in the states have fixed rate mortgages, but can move mortgages at no cost, if they can save 0.05% by moving. Thats the way to keep the banks on their toes!