Avoiding mortgage broker fee

[17GoingUnder]

Broker has arranged a DIP from a lender, the fee they've quoted is only payable once I'm in receipt of a firm offer.

Other than annoying the broker, are there any pitfalls to approaching the lender direct?

I would potentially be saving £500.

You may not get the same offer going direct, generally speaking any time I’ve used a broker the savings on what I could get on the open market has more than covered the fees.

When we checked it ourselves via the lender without using the broker our monthly payments were exactly the same 🤷🏻‍♀️

Yes. Not sure what you’re not getting here.

the fees are payable on a firm offer. You don’t have to obtain the firm offer in which case no fees are payable.l and everyone goes home.

but if you go round the back of the broker, and obtain a firm offer directly with a view to no longer paying the fee, then this is the line which is being crossed.

you wouldn’t have had that firm offer without the broker in the first place place. Do it if you want, but don’t pretend you’re not shafting the broker.

The advantage of using a broker vs the lender direct is speed. You tell your broker a bunch of stuff once, if you want to change the mortgage halfway through buying you don't have the painstaking bank calls. First Direct made me lose the will to live. x2 45 minute calls, or five minutes on the phone to a broker. And they force you to listen to all their disclaimers (lenders), I bloody hated it. It also took ages for a decision (a week, instead of 12 hours), and appointments ((10 days time "so we can formally apply" - what? but you gave me a DIP you lunatic!!!)), instead of same day).

A broker will also tell your prospective lender's mortgage rate has gone down betweeen application and exchange, ask you if you want the new rate, get it for you, and have the paperwork reissued and it really is that hassle free. With a bank (at least with FD), they tell you you have to watch their rates yourself.

As for paid versus non paid broker: I have found them to be EXACTLY the same, and I have tried probably 9 of them.

Use a broker for speed. But, unless you have complex circumstances that need a lot of personal care and attention (where building a decades long relationship relieves stress and thus is worthwhile), I would not pay.

They could never get us a better rate than the non paid brokers anyway.

L&C (free) are fine. Sometimes they drop the ball, but frankly, they all do. They have also always had the best rates, after many years of extensively looking at all other options.

London and Country are free and their explanation is here

https://www.landc.co.uk/about-us/how-are-we-paid

They are still recommended by Money Saving Expert, we have used them in the past but now just roll our mortgage with the same mortgage provider as they give us a great competitive rate.

Half way down MSE page, is how to find a top mortgage broker

www.moneysavingexpert.com/mortgages/best-mortgages-cashback/

What you’re not getting here, is that there is no firm offer. There’s a DIP, nothing more.

I think its unethical.

But do what you want.

Most brokers get special deals- so not sure if they will offer you the same direct.

It's unethical and, if the broker has already done some of the work, they will be severely out of pocket.

If you had no intention of going via them, then you have wasted time they could have used for a genuine customer, not just the phone call but the research before and after your discussion. This can be several hours depending on the complexity of your needs

If they have already started the process of getting a DIP then they will have incurred costs for using ID checkers, researching offers etc.

As others have said, brokers can get deals you can't and a good one will be handling a lot of background activities to save you time and money. Personally I think £500 is nothing compared to the amount of hassle you will avoid.

I do get that there’s no firm offer yet. That part is really not difficult.

but if you want a firm offer with this mortgage provider then you have 2 choices:

shaft the broker who found you the deal and go direct
go via the broker and pay

it’s as simple as that.

£500 really isn’t nothing trust me.

I used a broker (fee free) and it was worth it - it was just for a remortgage but the bank was so slow. The broker kicked some arse and got it moving - they had clout I wouldn’t have

If you can’t afford £500 then should you be getting a mortgage in the first place? Will you be able to afford it when the rates change?

If you go direct and a better offer is available between offer and exchange, the mortgage company won’t tell you, if you go via a broker, they will be able to move you to the better deal. Saving way more than £500

It’s a real shame to see you don’t want to pay the broker but you do want to use the fruits of the labours their expertise and knowledge.

Its incredibly unethical, and if you had a job where you were only paid after you’d done the legwork for something and you found out that you’d been ripped off by a customer who fabricated a loophole so as not to pay you, I’m sure you’d be very disappointed, to say the least.

I can give you the benefit of the doubt here, as given your responses so far it’s clear that it is likely you didn’t understand what a broker was or how they worked, but even if that’s the case I think you need to suck it up on this one and pay for it. If that isn’t what’s happening, I don’t think there’s any excuse and that you’re just ripping them off.

Regardless, you should pay. And you should remember that what goes around comes around.

I’ve used a broker but they get paid by the mortgage company, not me. I’m savvy enough to know when I’ve got a good deal.

And you'll get a better service from a fee paid broker as they take on less clients so they can offer a more personalised service unlike the fee free brokers who work on a volume basis and don't have time to offer the extra services in my above post

So, if you feel you could get this offer without the broker, why have you wasted the broker's time ?

IME (me starting over 35 years ago, and my dc's dealings in the last 7 years) brokers have always been able to get MUCH better deals than anything 'on the High Street' offer directly.

Having worked in this field, it’s a crappy thing to do. You used their skills to find you this deal and now aren’t willing to pay the fee. Please do the kind thing and don’t engage with anyone else’s services. Do your own research and proceed fee free as you wish.

As others have said, you may well not get the same deal yourself as via the broker. They often have access to exclusive rates

Hopefully this is the case, and serve you right for being underhanded

We paid £500 for our broker and that was a one off fee, he since assists us with every remortgage since with free advice. I can do it myself as I understand the process and rates etc. but always best to have professional advice and potentially better rates so we stick with him! Well worth the money

I am a broker who charges a fee on offer (also £500)

I do the dip with a lender who has a soft search
At application i will check the rates again (as rates change daily) and the application may go to a different lender
I also check the rates every friday and if rates have dropped offer to change it (one client ended up £90 a month better off after 8 rate changes during their purchase which on a 5 year fix saved them a ridiculous amount)

An aip doesnt mean an offer. I had a case offered this week where the lender offered a lower loan amount twice and i managed to overturn that decision as i was able to evidence why my reasoning was right

If it goes wrong e.g a downvaluation, vendor pulls out or a crap survey the broker can redo the paperwork for a new property or loan amount same day rather than waiting for a new appointment which can take a while to get from the bank direct.

As a broker i would say if you didnt intend to pay a fee then approaching a fee paying broker in the first place, getting them to do an aip (takes me about 2 hoursish with discussions and paperwork) with the intention of getting a lender name and doing it yourself was wrong. I have had a case or two before where people have done it to me and it has gone wrong direct and they have come back to me to sort it out. One i got a mortgage offer with the same lender that declined them direct- that was when i was less busy and would take people back- now i won't

If you want to cut the broker out then go ahead but you shouldnt have approached them in the first place. If you want a free broker go to a free broker - it is a less personalised service and more of a stack em high situation where it is mainly a rate comparison service but if that is what you are after then do that

Why even engage a broker when you clearly had no intention of ever paying. It’s fine to go direct and not use a broker. What isn’t fine is wasting a brokers time when you never had any intention of going through with them or paying their fee

It seems from the comments that different brokers do different things, some other posters have had brokers do a lot of coordination, and others maybe not.
Is the issue you feel your particular potential broker hasn’t done enough to warrant the charge? In which case if you don’t actually have an offer yet, it’s too early for the broker to assist with any coordination.
£500 in the world of house moves really isn’t much, against all the other associated costs with the entire thing, but only you know the services which this particular broker is offering within the scope of the fee

1. The broker told you which lender.
2. They probably also had access to different rates than those on offer to private individuals.
3. If you had no intention of paying, why did you go to a broker in the first place?

Could you arrange to go and see the broker again and if he pops out the room, say to the toilet, you might be able to sneak his credit card out of his wallet and spend a few thousand pounds before it’s blocked? That would help you make more money from the broker and be a better financial option?

😂😂😂

I used a fee free broker who negotiated me £5k off the price of the house I was buying. I didn’t even ask him to but was very grateful. Pay your broker for their work.