Mortgage broker fees

[Daftmum47]

A mortgage broker is charging me £995, seems a lot. Is this within the range of normal?

It could be a slightly complicated mortgage - sole trader, applying for mortgage on my widow’s pension - so I accept some advice is handy!

We have used the same broker for years. He's never charged us. They get paid by the Mortgage companies. Are you sure that amount isn't from the mortgage company as their fee?

Is it a mortgage arrangement fee - that would be a normal amount.

we paid our broker £400

I think my SIL charges £200 fee

Most will get ‘commission’ from the lender they source your product from.
I personally wouldn’t go somewhere that’s charges a fee. Mortgages are expensive enough already!
I would however be asking which lenders they use and doing some research on the best broker rates myself.

@Lonecatwithkitten yes it’s a mortgage arrangement fee.

I’ll check the small print. He’s a broker used by my late partner in the past, so when we bought our house together 5 years ago, I went along with it unquestioningly, but now as a single mum I
feel I need to double check everything for value.

I work in the Us on the wholesale side.

you need to compare the terms of your mortgage against what you would pay if you went direct to a bank. In the UK Santander and nationwide are two of the most efficient lenders in residential mortgages. Hsbc isn’t a bad 3rd option.

To compare the terms, the easiest way is to ask the broker to give you the costs of the mortgage they are arranging for you at closing you are responsible for and the monthly payment during the period you are locked up for. The banks/building society you approach directly should also do the same calculations for you. You can then compare more easily between the different offers as you will have a monthly average.

“the easiest way is to ask the broker to give you the costs of the mortgage they are arranging for you at closing you are responsible for and the monthly payment during the period you are locked up for”

thanks @Aintnosupermum . But don’t think I could do this without first having paid the broker?

If the broker wants to get paid they need to give you the information so you can make an informed decision. They need to disclose all the upfront fees plus any termination fees. You are asking for the disclosure to be presented in a way you understand and enables easier comparison. If they can’t do that find a broker who will. There are plenty.

I’ll get off my soapbox. Buying a home is the most expensive purchase for the majority of people and the costs associated with lending the money should be clearly presented in a way that enables the borrow to understand the transaction they are entering into.

We paid £250 a year ago. Fee paid only once we had a mortgage agreed, signed and in place - after surveys had been completed and valuation done.

Hi @Daftmum47 me and husband paid our broker just under £600. This is a one off fee, so next time we need a mortgage he won't charge us a fee.

Does the fee go to the broker or the lender?

Many lenders charge mortgage arrangement fees. You have to look at the overall cost of the deal. Usually you have a choice of no fee or to pay a fee and you'll get a slightly lower interest rate. It depends on the size of the mortgage and length of the deal at to whether it's worth paying a fee.

There are free online brokers where you can enter your details online and they'll give you a few examples of good mortgage deals that you're likely to get accepted for.

I believe there's a standard 'key facts' document they have to give you that sets out all costs and how they get paid and how much.

Have a look on Moneysavingexpert.com for a comprehensive downloadable mortgages guide that gives you all the information you need to know.

No, I’ve checked. So the deal is I would pay him £995, and at that point he goes off and researches the best product for me from the whole of market. (I can see the flaw in this already!)

Another kicker is that I’m looking to borrow £90k to £100k so it’s probably going to be just over 1% of what I’m borrowing.

There are a few complications, and part of me would like to go to him because of the link to my late partner and me buying our family home together, but it’s sounding like a bit of a rip-off.

@BarbaraofSeville fee goes to the broker.

Yes, I’ll have a look at MSE.

@Summer2424 the way it’s being framed for me, is that if my bid is unsuccessful, when I next bid on a property (requiring more borrowing, by then I may no longer be a sole trader etc etc) there will be no fee then.

Contact Paul Ridgeway at AMW Finance. Brilliant. My whole family have used him for mortgages, a couple of us self employed. Always got us sorted. Charged £500 I think in 2019 for us. However, fee only payable on completion. So, no purchase, no fee. I always recommend him on here.

I should add, was all done via email and phone calls as I live elsewhere in the country, so never required to go to their office or anything.

Mortgage broker here - some charge fees, others do not. If you use a large company with many brokers, chances are they may not charge any broker fees becasue if that particular mortgage is unsuccessful, they can soak up the loss (time spent). If you use an independent, whole of market broker, they may well charge a fee. As a Pp said, they're normally payable on completion and usually the more complex the case (adverse credit, debt consolidation etc) then generally, the higher the fee. Purely becasue of how long it can take.

The fees from the lender are know as 'proc fees' and can range from £40 - £000s dependant on the case. A broker charging a fee ensures a steady income stream. If they have 10 x £40 fees in a month, its barely going to cover heating bills today!

In all cases, it is set by the Financial Conduct Authority that a broker MUST disclose all fees. You will find that information on your ESIS (the paperwork which sets out costs, charges, Lender, term, charges etc etc). You can ask for this from your broker. If they refuse, its just not very good practise and I'd suggest going to someone who is willing to spend time with you.

I'd also ALWAYS recommend using a broker rather than direct. They'll normally have access to most major banks, building societies and other lenders and can literally check the 'whole of the market'. Saves you the job of going through all your information again and again and again...

Hope this helps!

Thanks - these are useful perspectives.

We paid £499 to our broker but he had done absolutely sterling work getting us a mortgage with several complicating factors. We would never have got such a good product on our own. So it was money we were happy to pay. It was only payable at the end though. In the past we’ve had free brokers who were paid by the lenders but we were more straightforward borrowers then.

£995 upfront sounds quite dodgy to me.

My broker charges nothing. He's just doing my second mortgage for me and I'm probably biased but he is bloody good. If you want details please message. Nothing in it for me just happy to give a good recommendation for someone who has a great track record of being fantastic.

£995 or sometimes £999 is the mortgage product fee. What does sound dodgy is your broker charging you. Never known a legit broker to charge. They get their money from the mortgage companies.

Did you read the OP’s posts? She’s been asked to pay her broker £995 upfront and he will then go and research products.

Our broker works for a major firm very often recommended on here and elsewhere. As I said, we had complex circumstances and were happy to pay for the work he did. I know other brokers don’t charge - as I said, we’d had one before who didn’t - but there was nothing dodgy here. Several other posters have also paid brokers and not felt ripped off.

Just got to L&C and save yourself a grand.

1k upfront is insaine!

Most recent one I paid £250 on completion. I would not be pay8ing upfront for them to check the market - no need?
They check the market, get you a deal and then they get paid

so you pay him 1k, gives you a shit deal and you say no and he keeps the 1k? nahhh i smell a rat