Martins View On Using Mortgage Brokers...

A question about : Martins View On Using Mortgage Brokers...

Hi,

As its often debated here 'to broker or not to broker' I thought I would briefly lay out my thoughts.

The right broker is a big benefit. Far better to go to a broker than direct to one lender who will simply try and flog you their own mortgage. They will look after the market and possibly bring you better negotiating power Overall I'm a broker fan!


Of course there are ifs and buts. The two key questions to ask a broker are

are you whole of market?

and

do you charge a fee?.

If the answers are yes and no then... whey hey hey... we're off to a good start. If the answer is anything else I would seek another broker.

IMPORTANT NOTE: Please read the relevant articles

Remember this is the Chat Forum, its for discussion by lots of parties. However the main information on this site is in the articles section. Please do read those before getting involved in discussions which will often get very technical.

The two most relevant for this are Get top mortgage advice for free article or even better, its included in the free 28 page MoneySavingExpert guide to remortgaging available as printed guide or download a PDF (or read more)

What about the brokers answering questions on here?

First of all say thank you. Many of them do a great job without renumeration for it. It's a great place to ask. Of course its always worth remembering just because someone says they are a broker doesn't mean they are, however, the vast majority on here are genuine and want to help.

Can they generate business from here?

Touting for business is strictly forbidden. However if someone helps you out, and you feel they can help you, if you approach one of the mortgage brokers on the site I've no problem with them helping you.

Do check out the whole of market and fees free notes above to make sure they are right for you though. And double check they are genuine, ask to see their creditials and that they're authorised by the regulator, the FSA.

Hope this helps

Martin

Best answers:

• Martin,
  Thank you for this post, I think it was needed as just of late there have been a few posters trying to imply that our motives are less than honourable.
  From a personal point of view Martin you already know my motive and reasons for posting here, all of which fit in with the ethos and rules of this site, of which I am a loyal supporter. It is a welcome release to have an enviroment to give help freely and without obigation either way.
  I will continue to support your site and, as long as you permit, will continue to help those who post here. After all I wouldn't have been thanked so many times in a short period without doing some good
  Andy
• Can someone clear this up for me please?
  Martin says that the second key question to ask a broker is "do you charge a fee?" and if the answer is "yes" to seek another broker.
  My mortgage adviser charges me a fee for giving me advice, and says that this is because she is an "independent mortgage broker".
  She says that if I dont use an independent broker, I cant be offered all the mortgage deals in the market.
  I have contacted another mortgage adviser, who was recommended to me, and he says that he is not an independent broker, he doesnt charge a fee, but can get "whole of market"
  I am confused.
  Does it mean that all independent mortgage brokers charge fees?
• No- I am whole of market and nearly always charge a fee in addition to the proc fee paid by the lender- It's a business decision! And, suprisingly, i disagree with Martin on this!
  It's all about value for money- and, in my case, some transactions need the attention that earning more than the proc fee gives. To be honest- and i haven't read the full article yet, i feel the issue of arranging the loan on a face to face or remote basis is a bigger question
  With respect to those fee free brokers on the board!
  SS
• Let me see if I understand you quite correctly.
  You said - "No" - to the question "Does it mean that all independent mortgage brokers charge fees"
  The reason I need to be sure on this is becasue I have just phoned my second advisor (I am about to make an offer on a house I have seen!), and I discussed this "independent" issue with him, and he said that if he wanted to be an "independent" he could be, but he would have to charge a fee, and he doesn't want to do that.
  He says that it is in the new mortgage regulations that if he wants to call himself "independent" he has to charge fees.
  Sorry to go on about this, but when Martin says "seek another broker" if they want to charge you a fee, I feel sure it must be good advice, but at the same time, I feel I am being misled a little by this first adviser.
  I suppose what I really want to know is - can a mortgage broker be an "independent mortgage broker" and offer a "fee free" service ?
  My second broker says, categorically "No they cant - they are bound by the regulations to charge fees, so there is no such animal as a "fee free independent mortgage broker" and that is why he is not one.
  Who am I to believe ? help ! I need to make a decision.
• This is now even more confusing.
  I decided to take a look at Martins pages on how to pick a broker, and have copied some of it below.
  He seems to agree with my second mortgage adviser, in that a "whole of market broker, only taking commission, can't call itself independent".
  But this is the opposite of what you say isn't it Dunstoh ?
  "Many brokers charge both fees and take commission. However, to call themselves an ‘Independent Mortgage Broker’ they must offer an option to pay fees only with any commission earned rebated must be available. Yet in practice this is bunkum as what tends to happen is this: they offer to allow you to pay either a “1% fee in full and they will rebate their 0.35% commission” or alternatively they’ll suggest you can just pay a “0.65% fee and keep all the commission” in other words, no difference.
  Worse still, it means a truly whole of market broker, only taking commission, can’t call itself independent even though it is providing the same advice and is cheaper, so sadly it's best to simply ignore the ‘independent’ term, and simply stick with the questions."
  I now seem to be torn between Martins advice (which seems to agree with my second "not independent" broker), and the independnent broker number 1 and Dunstonh.
  Does it go like this - an independent broker has to charge a fee and can choose to pay some of the lenders commission back to the customer (and can use "whole of market") but a "not independent" broker does not have to charge a fee (but can if they choose to) and can also have access to "whole of market" simply because they are a self employed mortgage adviser (like my second mortgage adviser) and work on their own (again like my second advisor)
  If that is correct, then Martins advice now makes sense - "whole of market" can be applied to any mortgage broker (as long as they are not tied to a lender or other group), whether they are independent or not, and whereas independents will always charge a fee (because they have to by law) non independents can choose whether to or not (their own personal decision.)
  Go on, tell me I've got it right.!?
• Thank you Dunstonh, i understand it now.
  My second advisor is right.
  It seems he can offer me the same "whole of market" options on my new mortgage as the independent advisor, but do it without charging me a fee.
  I can now see why Martin advises to look for another advisor if the one I am talking to charges fees.
  By the way, my offer has been accepted!
  Fingers crossed I dont get Gazumped !
  I now need to ask my advisor to find me a good 5 year fixed rate at just under 90%
  I would appreciate any ideas on lenders, so I can see how he compares to what you or any of the other brokers on here might suggest as possible lenders.
  I know my income is enough, they both say I am well inside the limits on this, and my credit is perfect.
  I dont want any penalties when the 5 years come to an end, though.
  Oh, and obviously, now that I understand that the only difference between an "independent" and a "non independent" is the option of paying fees or not, I would happily accept any advice from a "non independent"
  Thank you Martin, a great web site.
• I thoght I understood it , until your last comments,
  You say:
  "This is why seeing an independent is better than whole of market as you can get both options priced up and make the choice from there."
  But isn't "whole of market" available to both independents and non independents (like my second advisor) and as Martin says:
  "Many brokers charge both fees and take commission. However, to call themselves an ‘Independent Mortgage Broker’ they must offer an option to pay fees only with any commission earned rebated must be available. Yet in practice this is bunkum as what tends to happen is this: they offer to allow you to pay either a “1% fee in full and they will rebate their 0.35% commission” or alternatively they’ll suggest you can just pay a “0.65% fee and keep all the commission” in other words, no difference.
  Which surely means that a non idependent can charge a fee if they want to, whereas an independent has to and they can both offer "whole of market"
  By this logic isn't a "non independent" perhaps a better option, because they dont charge fees and yet can still offer "whole of market?
  Martin appears to be saying that if a broker offers a whole of market service then this is good, but if they charge a fee for their advice (rather than work on the commission alone), look for another broker. Yet Independents charge fees.
  I think I must be a little stupid.
  Sorry to take up so much of your time.
  I really do appreciate it, but I'd better just stick to the rule of "if they charge a fee, go elsewhere, and make sure they can offer you just about everything that is going"
  My second broker is suggesting a Nationwide BUilding Society 5 yr fixed rate at a rate of 4.78% (as I am borrwing less than 90% of the price of the house I am buiying). Any opinions on this would be appreciated.
  My first broker is away for Easter break.
• But a non independent that is whole of market, and doesnt charge a fee, costs less than a broker that does charge a fee ? Yes ?
  The other thing I dont understand is why you say it is probably cheaper to have a larger mortgage arranged on a fee basis, rather than commission, if my broker is not going to charge me a fee anyway.
  Surely fee free is cheaper than payng a fee ?
• Hang on a minute.
  Dunstonh said that I could pay a fee and have all the commission refunded to me.
  So if an independent adviser charges me say Ј600 as a fee to sort out a mortgage for me, but the commission is Ј1000 that he earns from the lender, he would end up giving me Ј400 as the balance.
  In other words, he is paying me to do my mortgage !
  (Martin says he wouldn't refund all the fee, but Dunstonh says he would. Who is right?)
• Here's where the confusion seems to lie:
  Stanmore says:
  Quote:
• I've looked at all the examples, but it still doesn't answer the conflicting statements made regarding the full refund of commissions made earlier, that would result in me getting paid for allowing an independent to do my mortgage for me, where the commission is larger than the fee.
  You say the broker does have to refund all the commission he receives on one posting, but then says he does not on another ?
  Perhaps Martins advice is the best to follow:
  "You want a fees-free, whole-of-market broker. This means it only earns commission, however as it’s whole-of-market, it must give you best advice anyway."
  and
  Advanced MoneySavers Note: Why ‘independent’ is irrelevant
• Sorry if this has been done before - Im a bit overwhelmed by all the new info!
  Im really new to all this - Im buying my first home. I called L&C to make a basic enquiry, and got a little carried away and the guy searched the market and called back promptly with a mortgage by Abbey. But can I get advice from someone else (or indeed go through that one that gives a rebate-i know, its a little cheeky), and what are the benefits of applying through the broker compared to directly with abbey?