Mortgage Brokers

D

declan conno

Guest
When processing a mortgage through an independent broker what way do you pay his commission?.Does he get a lump sum from lender independant from you or do you pay extra each month on top of your repayments(hidden)?and if so how much extra are you paying?

Thanks poeple for your replies the picture is clearer but really who pays the 1%?
Is it hidden in my repayments and if so how much over the life of my mortgage does it amount to?
 
The lender pay the commission to the broker. It does not cost you anything extra. If you go directly to the lender then they just keep the commision for themselves.
However, some brokers may do a deal where they kick-back some of the commisson to you or else provide you with some extra services 'free of charge' in return for doing business with them. So in reality, there is some scope for you to improve your end of the transaction.
 
declan conno said:
processing a mortgage through an independent broker
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Impossible, independent broker do not exist;) How could they be independent as they are paid by lenders and therefore have a vested interest in recommending one vs the other , their choice is not necessarily the best for your but for their commission.
Also, they do not operate with all lenders, but with a small selection of them.
So, if you go broker way, you need to shop around the brokers....So while you are at it, try going direct as well, and drawn your own conclusions.
Happy shopping
 
Impossible, independent broker do not exist;)
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Okay - I'll take the bait. :D Independent brokers DO exist - you just have to know how to go about finding one.

Relevant questions for a consumer to ask a mortgage broker: -

  • How many lenders do you deal with?
  • Why are you recommending this product to me? How does it compare with other institutions' offerings?
  • Of the lenders that you deal with, what split of your business goes to each? (You're not asking them to disclose the size of their business - just percentages - but if a broker allegedly deals with seven or eight lenders, yet 95% of their business actually goes to just one, you've got to question why.)
Liam D Ferguson
www.ferga.com
 
Impossible, independent broker do not exist;)
I would disagree with this - a lot!!!!

How could they be independent as they are paid by lenders and therefore have a vested interest in recommending one vs the other ,
Really? Lenders pay pretty much the same comission (1%) why would I prefer one lender to the other then?

their choice is not necessarily the best for your but for their commission.

Again, same comission from all lenders, doesnt bother me one bit which lender I recommend!
they do not operate with all lenders, but with a small selection of them.
Really? IMAF - the body representing independant brokers insist that members have at least 5 agencies. My company has 11. Does this sound like a small selection?
 
Lenders pay pretty much the same comission (1%) why would I prefer one lender to the other then?

Maybe to you but not to all brokers according to this

[broken link removed]
 
Sorry the burst you bubble guys!

Which of you "independent" brokers offer the NIB <60% tracker mortgage @ 2.79% the cheapest in the market?
 
demoivre said:
Lenders pay pretty much the same comission (1%) why would I prefer one lender to the other then?

Maybe to you but not to all brokers according to this

[broken link removed]
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The above is basically true, but any decent sized brokerage has absolutly no problem with this! A good sized mortgage broker meets these levels of business very early on in the year. I dont see how this makes a broker prefer one lender over another?
 
Lemurz said:
Sorry the burst you bubble guys!

Which of you "independent" brokers offer the NIB <60% tracker mortgage @ 2.79% the cheapest in the market?
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I gladly recommend this product to clients, when it is appropriate. Not every customer has a LTV of less than 60%, not every client has a massive salary, not every client is looking purely for the cheapest option. What about flexibility? what about customer service, what about investors in the property market? I would estimate that less than 10% of my new business ends up going to NIB on the basis that its not what the customer wants or needs.
 
The only way to have complete independence is where an MAI or an AA receives no commission at all from financial instutions / insurance companies etc. ie the punter in the street pays the broker/AA to do a job . To suggest otherwise is to suggest that brokers /AA's are indifferent as to whether the get paid or not for a particular case. If the next two weeks appointments for a broker are made up of people looking for 3 and 5 year fixed rate mortgages will the broker recommend the non commission paying NIB as being the cheapest in the market in all cases? Michael Dowling of IMAF doesn't seem to think so [broken link removed]
 
demoivre said:
The only way to have complete independence is where an MAI or an AA receives no commission at all from financial instutions / insurance companies etc. ie the punter in the street pays the broker/AA to do a job . To suggest otherwise is to suggest that brokers /AA's are indifferent as to whether the get paid or not for a particular case. If the next two weeks appointments for a broker are made up of people looking for 3 and 5 year fixed rate mortgages will the broker recommend the non commission paying NIB as being the cheapest in the market in all cases? Michael Dowling of IMAF doesn't seem to think so [broken link removed]
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So I suppose on that logic, the only reason you do your job to the best of your abilities, is for the paycheck at the end of the month? ie the only motivation people have EVER is money?
 
Nobody in their right mind expects anybody to work for nothing. I think that a key thing here is that the consumer is aware of how the intermediary is remunerated. Ideally this will be made clear to them but if not then they should ask. As long as the consumer is aware of how the intermediary is remunerated (e.g. commission, flat fee etc.) then they can at least make an informed decision. In general I would imagine that paying a flat fee to an nil-commission intermediary (an AA or a good multi-agency intermediary) might be the best bet on independent, objective service. Of course, many people could get just as good a deal on their mortgage and associated financial products by simple shopping around independently and cutting out the middle man. For those that can't/won't the old adage of caveat emptor applies.
 
Munsterdude said:
So I suppose on that logic, the only reason you do your job to the best of your abilities, is for the paycheck at the end of the month? ie the only motivation people have EVER is money?
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Let's just stick to the basic facts - the amount a mortgage broker gets paid depends on which financial institution they recommend to a client . A 300k mortgage given by a broker to NIB means no commission and the same loan given to the commission paying Institutions will yield € 3000 to the broker according to the article I referred to above. Multiply this by 10 clients and you have a difference of 30k - not to be sniffed at ( unless you're Munsterdude and not motivated by money - he is indifferent as to making 30k or zilch, job satisfaction is what counts ) ! The overall question is simple " Is this scenario conducive to a broker being independent? I don't think so.
 
demoivre said:
The overall question is simple " Is this scenario conducive to a broker being independent? I don't think so.
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So, genius, whats your solution to this far from satisfactory scenario?

Would you rather pay a broker say, a flat fee of €2,000 - out of your pocket, and be recommended a course of action, or would you prefer to keep your €2,000 and still be recommended the EXACT same course of action?
 
Munsterdude said:
So, genius, whats your solution to this far from satisfactory scenario?

Would you rather pay a broker say, a flat fee of €2,000 - out of your pocket, and be recommended a course of action, or would you prefer to keep your €2,000 and still be recommended the EXACT same course of action?
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Well thank you for complimenting my intellect and I'm delighted you accept and acknowledge that financial institutions paying brokers for their business is not a satisfactory scenario. The solution is that either the punter pays the broker for his advice or every broker represents every mortgage lender in the country and they all pay the mortgage broker the exact same commission which is NOT the case at the moment. The president of IMAF " concedes that NIB probably won't get a mention". Now tell me Munsterdude is that because noone wants the best 3 or 5 year fixed rate on offer or because NIB dont pay you guys any commission?.........................hang on I'll ask my 5 year old daughter what she thinks!
Your second point again makes the assumption that the broker does give independent advice even though as we have seen different institutions pay you guys different percentages and NIB pay you nothing ........oh I forgot that doesn't matter to you, in the business for the good of your health eh. It beggars belief that you expect me to accept the fact that on a 300k loan you are indifferent as to whether you will get 3k in commission or zilch!
 
This thread proves the point that tighter regulation of mortgage intermediation (which is on the way) will be a good thing for both industry and consumer. For some years, in the life assurance / investment business we have had the concepts of tied agents, multi agency intermediaries and authorised advisors. A tied agent deals only with one provider, a multi agency intermediary with a set list of providers and an authorised advisor with all providers in the country.

These concepts are not at present part of mortgage intermediation regulations. I'm not sure if the forthcoming mortgage regulations will go quite this far just yet. In my opinion it would be a good thing - you could have a tied mortgage agent, who deals only with, for example, EBS (this exists at present), a multi-agency mortgage intermediary who deals with a specified list of lenders (and makes this clear from the start of the sales process) and an authorised mortgage advisor who deals with every lender in the country.

For the record, I'm a multi-agency intermediary in the life assurance / investment business and operate as such in the mortgage business also.

Liam D Ferguson
www.ferga.com
 
demoivre said:
Well thank you for complimenting my intellect and I'm delighted you accept and acknowledge that financial institutions paying brokers for their business is not a satisfactory scenario.
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I will gladly compliment your intellect as soon as I see some signs of some! I do not accept and acknowledge the unsatisfactory scenario - I was quoting you!

demoivre said:
The president of IMAF " concedes that NIB probably won't get a mention".
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Thats fine for him and his IMAF members - I am not a member of IMAF, and I dont subscribe to his view point. I have and will gladly recommend NIB to those clients who NIB suit best. I dont get paid by NIB, and I make my clients aware of this fact. They on most occasions are quite happy with my advice, adn in general will pay me a fee for my advice. They are not obliged to pay me this fee.

demoivre said:
Now tell me Munsterdude is that because noone wants the best 3 or 5 year fixed rate on offer or because NIB dont pay you guys any commission?.........................hang on I'll ask my 5 year old daughter what she thinks!
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Then how come NIB are not making hay when the sun shines? How come every mortgage holder in the country is not with NIB? Because there are various other factors in consideration here. NIB do not suit everyone. I make recomendations to my client as to the best option for them. One size does not fit all.

demoivre said:
Your second point again makes the assumption that the broker does give independent advice even though as we have seen different institutions pay you guys different percentages and NIB pay you nothing ........oh I forgot that doesn't matter to you, in the business for the good of your health eh. It beggars belief that you expect me to accept the fact that on a 300k loan you are indifferent as to whether you will get 3k in commission or zilch!
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It beggars belief that someone like you cannot accept the posibility, that it is possible to give good advice for customers, have the customers best interest at heart, have ethics in doing business, and also make a profit.
 
I pay my GP, solicitor , dentist ,architect etc. myself so I am confident of getting independent advice as they have no vested interest. I don't for one minute believe that my best interests would be served if builders paid (and different builders paid different amounts) my architect for advisng ME to select a particular builder , orthodontists paid my dentist , barristers paid my solicitor or consultants paid my GP . Why should it be different for mortgage brokers?
 
As one of the few fee based advisors here is another observation

1. Mortgage Brokerage is about offerring choice and service to our clients. As an industry we do ourselves no favours to saying one thing and doing another. Most brokers say they deal with all lenders when in fact they do not. REA attempt to clarify our offer of choice by publicly disclosing a percentage breakdown on our website of where we send our business as we feel this is much more meaningful then the number of agencies we hold. And to be honest you can see we don't send business to NIB because they don't deal with brokers. We do advise clients if that is the best deal for them and let them deal direct with NIB as as a broker NIB simply (as of now) don't want to talk to us and want to talk to the client direct. To be clear no fee is charged for this. While we do not offer every possible lender we offer a pretty good choice.

2. IMAF often puts their interests before clients. When First Active cut their commission in half IMAF members effectively boycotted FA even though the only difference was the size of the commission. Their reaction to Ulster Banks switcher mortgage is a matter of public record. REA have never been a member of IMAF.

3. All professionals need to get paid for the value they bring to their clients. But charging a fee without refunding a commission strikes me as double dipping unless there are some extraordinary circumstances. The truth is most homebuyers want independent advice but they do not want to pay for it. Even in our business a significant number of clients do not want to pay a fee and instruct us to keep the commission in lieu of a fee even when the fee costs less.

4. As discussed with Jill Kerby mortgage brokers should offer additional value to home buyers [broken link removed]

5. Can you arrange a mortgage better directly - maybe. Will it cost you time and effort - maybe. Otherwise a professional mortgage advisor can help.

richard eberle
 
I didn't think NIB offered agencies to mortgage brokers, so why would a broker recommend them if he can't do business with them.
 
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