Mortgage broker fee

S

scruff

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Myself and the girlfriend used a mortgage broker to help us apply for a mortgage, which he did. It was at the pre-approval stage and we were looking at some houses. However we haven't seen any houses to our liking and a business opportunity has come our way so we are putting it on hold for now. The broker had said that his fees are paid by the bank, except for when dealing with a certain bank. If we got our mortgage through them we would owe him a sum of money but otherwise we wouldn't owe him anything.

So, because we didn't purchase a property do we still owe him a fee?
 
Mortgage brokers set their own fee policy. From what you've said, your mortgage broker gets paid commission (by all but one lender) and doesn't charge an additional fee. So unless you agreed a "cancellation" fee in advance, or there was something in his Terms of Business about fees being payable if you don't proceed, I'd say you don't owe him anything.
 
When I used a broker we got a terms of business before we started the application, they stated that if we pull out of the process we will be required to pay a fee for hours committed by the broker.
 
paulie83 said:
If he asks for one don't pay him these guys do very little work it's basically just copying your documents and send them to any lender who'll accept the application and hope for the best.
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If you really think this and are not just trolling for a reaction, then either you've had an experience with a bad mortgage broker, or don't understand what a mortgage broker does.

A mortgage broker should: -

  • Explain which lender s/he does business with.
  • Get details of your financial situation and requirements.
  • Calculate which lenders are likely to offer which amounts - each lender has different criteria and a mortgage broker will know them.
  • Explain the differences between the different products (e.g. variable, discounted variable, fixed etc.) and the differences between lenders' variations (e.g. some lenders allow you to make partial repayments when in a fixed rate; others don't).
  • Recommend which lender and product is most suitable for your requirements and why. This recommendation must be given in writing.
  • Let you know what documents you need to gather for a mortgage application.
  • Submit the mortgage application, highlighting the merits of the application for the particular lender, e.g. including a copy of the calculations using the lender's own criteria. A well-submitted application, having regard to the lender's specific criteria has a much higher chance of success than an application form chucked in an envelope with a few bank statements and payslips.
  • Multiple applications can be submitted if necessary to several lenders without the client having to prepare a new application each time.
  • Act as a go-between - keeping the client updated on progress and making sure the lender hasn't mislaid any documents (which does happen).
Can a savvy client bypass a mortgage broker and do all the above themselves? Of course they can. If anyone wants to do the research themselves and familiarise themselves with the different products (and variations on products) offered by the various lenders, as well as the criteria that each lender uses, they can deal directly with a lender.

But as for your notion that "these guys do very little work it's basically just copying your documents and send them to any lender who'll accept the application and hope for the best" - that's a generalisation about mortgage brokers which is just plain wrong.

In the interests of disclosure, my firm does arrange mortgages but it's only a small part of our business.
 
paulie83 said:
If he asks for one don't pay him these guys do very little work it's basically just copying your documents and send them to any lender who'll accept the application and hope for the best.
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Paulie,

you don't understand what is entailed if this is what you think, give them some credit, I suppose you think estate agents, solicitors, accountants do very little for their fee's also?
 

Honestly, if you're going to post on a public forum, you really should take the time to check your facts, because what you're writing here is simply rubbish. You clearly don't know what level of qualification is required before one can get authorised as a mortgage broker, what level of ongoing supervision is required, nor what level of continuous education is required to maintain the authorisation. Look these things up, and you'll see how your statement about "unqualified and uneducated" is nonsense. What's worrying is that you claim to have "worked in this industry" but you don't seem to have the first clue how it operates.

Next time you want to post insults about a particular profession, why don't you try to post something you can back up with verifiable facts, rather than untruths which don't stand up to any scrutiny?
 
In all industries you'll have good and bad eggs. And again not everyone needs the services.
I'd that the commission brokers are responsible for the majority of the bad opinions people have, however given LDFergusons openness about how they do business, I'd say they are one of the better ones. He has regularly stated that not all the banks deal with brokers, yet he was been incredibly helpful to a number of people in pointing out the different lending practices of the different banks. Not all them are equal, and it really isn't a simple as doing documents and "send them to any lender who'll accept the application and hope for the best". The amount of paperwork required these days it substantial.

My own opinion is that we should follow the recent change in the UK and remove commission based financial services completely. Fee-only for everything, especially investments. It'll cost more in the short term, but we would be likely to see dropping fees elsewhere.
 
I agree with Paulie on at least one thing.............
There is still a huge amount of sorting out to be done in relation to the fee and commission structure of financial service products in this country and
the lack of accountability and transparency.

The mortgage broker industry is more or less gone. I wouldn't worry about that too much.

The pension industry in particular is the one that needs much tighter control and will definitely become one of the huge scandals of the future.
There is a whole layer of parasites feeding on the retirement savings of others. There is no accountability on fee structures and very little linkage between what a fund manager gets paid and the performance of the underlying assets. I recently read through the small print of a private pension plan proposal and was absolutely horrified how all the rules were stacked in favor of the fund managers making money to the detriment of the beneficiary.
 
Agreed there are good and bad eggs but if your financial adviser represented any of the sub prime lenders and "advised" impartially of course in return for a commission from this lender for a loan not in your best interests would you not question their motives for helping you secure such a loan and also question their skill as "broker" or "financial adviser" or whatever term they choose to "advise" you down such a path.

Paulie83

So Mr Customer, I have bad news and good news, You have been declined by all the mainstream lenders but accepted by one of the Sub Prime ones.
Do you want to buy the house?

Were these people who were declined loans by the mainstream banks due to whatever reason beaten with a stick by the brokers into accepting the sub prime loans, the answer is NO, they wanted to buy a property and met the criteria set down by the sub-prime lender to qualify. The higher interest rate reflected the risk involved !

As you stated you worked in the industry did you complete your QFA's if so you know that there is a bit of work involved achieving them and a lot more to qualify for CFP status. if not maybe this is why the poor advice you seen given in your firm.

Getting regulated isn't so easy either, you have to go through fitness & probity to advise customers in a CF or PCF role, the Central Bank of Ireland takes a good prod around your personal, professional and financial affairs.

What Liam is doing is defending his profession the same way an accountant, solicitor or Priest for that matter will defend theirs, don't tar all brokers with the same brush please.

I dealt with a broker for my mortgage as I was turned down by my own bank even though everything stacked up. My own bank wouldn't take bonus earnings into account, Broker sorted me out with one of the mainstream lenders and I was delighted to purchase my house in 2006. I wanted the house not the broker, I got my house he got paid for arranging the loan for me, would you work for nothing?

Now it's worth 50% of what I paid for it but guess what it was the big bad brokers fault for getting me the money!!!!!!!!
 
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Dr Debt,

there are parasites in every industry, conveyancing fees, architect fees, accountant fees even Doctors fees.

Like always shop around and deal with someone you trust, commission doesn't necessarily mean bad advice, Fee based doesn't necessarily mean good advice.
 
Leroy, thanks for your reply but I aint buying it......

The pensions industry in particular is wicked because its not transparent and because of all the "feeders"

Yes someone will tell you at the end of the year what the bottom line performance of your fund is but you sure as hell wont know what the "real" top line performance is without digging deep.

We could open a couple of threads on this alone and delve into all the different angles.

I have some pension qualifications myself but I will never work in that industry until such time as it gets sorted out.
 
For the record, I am not defending all practices or all brokers. I am the first to acknowledge that this industry has plenty of room for improvement. I will happily debate and discuss issues with anyone if their arguments are based on facts.

But I do object to paulie83's ignorant generalised insulting comments about my profession. Although I've pointed out the various basic factual mistakes in his rants, he insists on continuing but doesn't acknoweldge that he got his facts wrong.

I have had personal experience of terrible practice by an incompetent solicitor. Yet I do not therefore assume that all solicitors are money-grabbing incompetents.

I have also had personal experience of medical malpractice for which a family member received a formal apology from the HSE. Yet I don't bang on on online boards that all doctors are ignorant and incompetent.

So if paulie83 would like to back up ANY of his rantings with ACTUAL VERIFIABLE FACTS, I'd love to hear them. Otherwise they can be dismissed as just the rantings of someone who doesn't know better.
 

As I suspected, you're unable to come up with a single FACT to back up your argument and you don't address the factual errors you made earlier in this thread, even though I've pointed some of them out. It's all just the ill-informed ignorant opinions of someone who doesn't actually have any facts to back them up. Go off and do a bit of research before you try to insult my profession again.
 

Paulie83

read my post, I said for whatever reason, lots of self employed people with perfectly good credit ratings weren't able to access main stream lenders.

As Liam said back up your argument with facts as you obviously seen some sharp practice. Was it in the firm you worked for? Poacher turned Gamekeeper me thinks!!
 
Dr Debt.

I presume you are talking about TER etc, agree it should be clearer and I have asked my provider for a complete breakdown. Choice to remain in an insured arrangement or self direct is the clients prerogative. I can self direct my pension through a life company wrapper pay .75% amc for the wrapper, invest in a passive etf tracking the Eurostoxx 50 and pay 0.36% fees within the etf or go through a life company via an insured arrangement and pay a 1% amc.If the TER through the Life Company isn't exorbitant I have an awful lot more comfort in my opinion within the insured arrangement.
 
Leroy, You're spot on.
just to be clear, Im not worried about my own personal pension circumstances which,by in large, I manage myself.

The big problem I have is with the industry itself and the way in which many high earner clients, entrust a lot of money to Pension Managers each year, mainly as a tax avoidance measure, it must be said. Many of these clients have very little knowledge of charging structures and the amount of money that is being diverted away from their pensions each year to brokers and fund managers. Brokers and Fund managers are getting paid vast sums of money each year, regardless of their performance. In my oppinion, the earnings are completely out of sync with both the quantity and quality of their work and is nothing short of a scandal.

I happened to be in the company of a Life sales person about a year ago who boasted about selling an investment plan to an elderly and savvy, recently retired, pensioner. The investment value was 1.2 million.
His commission on the deal was 105,000 for an afternoons work. The pensioner who I happen to know was certainly not aware of the upfront commission being paid to the sales person. This kind of thing is absolutely scandalous and it really has to stop. As long as the financial service industry has sharks like this in the high grass waiting for the uninitiated, I cannot respect what is going on.
 




I agree fully. For a long time I have suggested a legal requirement for a simple, one-page document to be issued to every client before they commit to any financial product that says: "If you invest €1.2 million in this product...
  • the sales agent will receive €105,000 in commission in year one
  • (if applicable) the sales agent will receive €A in ongoing commission in future years - table of renewal / trailer commission based on an assumed growth rate
  • the product provider will receive €B in product charges in year one
  • the product provider will receive €C in product charges in future years - table again
  • the fund manager will receive €D for fund management in year one
  • the fund manager will receive €E for fund management in future years - table again
  • the Government will receive €F in levies, taxes etc.
There should be nothing else permitted to be on this page to keep it clear. All the charges must be listed in Euro. The client and the sales agent should be required to sign it.
 
Entertaining reading but off topic, to get back to O.P.'s original question I believe those that do work deserve to be paid but it must be explained upfront and ideally signed off by all parties in some memorandum of understanding, If not then there can be no onus to pay anything to anybody, anybody else have a view on the O.P's original question..?
 
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