Is it normal for a mortgage broker to charge an up front fee?

[McSlowburn]

We are currently looking to remortgage and I had a chat today with a mortgage broker and explained our circumstances. He then emailed me a list of documents he needed to proceed, including a link to a 'FactFind form’ detailing our financial situation.

After I’d submitted the form I called him with some queries and he said he could apply to a lender for an Agreement in Principle with just the information on the form, and that the other documents were more for their own compliance purposes.

Shortly afterwards I had an email from him attaching a Decision in Principle from a lender (same as an Agreement in Principle). It’s a good rate and looks promising, but he said in order to proceed he will charge £300 now and £300 when we receive the formal mortgage offer.

This is the third time in a decade that I’ve used a broker and it’s the first time I’ve been asked to pay upfront before they will actually do anything. Does this sound suspicious?

Because it was a complex mortgage, with debt and I needed an adverse lender and help and for it to get done quickly
They got me a DIP in 24hrs

Yes some charge commission some charge fees always use an independent one though I ah e a great recommendation of you want to pm me

Ours have always been free as the mortgage company pay their commission when we take their product

Ours didn't but if I had found a really decent highly recommended who did I would still pay it. We just remortgaged and thought it was going to be insane with the base rate rising but they held on for a deal and then even when we had signed everything they came back a week later and offered an even better deal and saved us about £100 more a month.

They legally have to declare it and it’s an FCA requirement

The term broker is what the public use full stop in the industry they are referred to as intermediaries.
Some companies such as a cord will only deal with brokers because they do a lot of them background work and reduces the number of staff they have to have. Intermediaries often have access to mortgages from major companies that only allow it through an intermediary at a slightly preferred rate, or two more risky clients who would be refused by the computer, as the assessment of them has been done by the intermediary.
As an example here is nationwide's intermediary website.

www.nationwide-intermediary.co.uk/

I think because then you know the broker is working for you, and able to find the most appropriate deal for you across all options. Mine came up with options not offered by previous mortgage company, really gave me a better perspective. Certainly worth it, and a lot of work that they did for me which was of value - of course it should be paid for!

"How do you know your broker didn't see you as a fool and also receive a fee from the mortgage provider?"

I believe most brokers that charge a fee will also be a paid a commission by a lender. They do have to disclose this to you. And why shouldn't they? My husband and I have good credit and are pretty straightforward for lending and no we don't have to pay for one or use one, but do you have time to do all the chasing ??? I remember when I bought there was a lot of bloody chasing and our brokers assistant did it all! In fact, loved her assistant and would use again if it was just the assistant but I didn't actually like the broker (more a personality thing) so that's why we are looking for someone else this time.

Call the lender yourself and see what offer you'd get without going through the broker.

Australia, so not UK, but my DH is a broker. They now charge fees to all new clients for two reasons:

1. because the industry is moving away from commission because of concerns around brokers recommending products with higher commission (very rare).

1. CF time wasting clients who take his time, ask for info then go direct to the bank, refinance immediately (he does difficult loans which are easier to refinance once a difficult to get loan in place) or pull out of the deal last minute. Last year DH spent our entire holiday working on a mortgage deal with a bloody annoying client who was stuffing around, then the day we got home changed her mind about the property. About 20 hours of non chargeable work. This also affects DH come annual performance & payrise discussion time.

We nearly went with a deal from a paid broker but then tried L&C who were free, and they got us a way better deal. We weren't a straightforward application but they were fantastic. Their communication was faultless, would highly recommend.

No, not in my experience. I've just remortgaged and didn't pay him anything this time or the first time. He gets it from the provider

Most brokers who charge a fee will also be paid by the lender. I work for a not-fee charging broker and we go the extra mile for every client, its hurtful to read some comments on here. Yes, if an application doesn't proceed we don't get paid for that case, but usually the client will come back a year later or whatever, or recommend us to people so it works out in the long term.

Also when using "brokers recommended by MSE", remember they pay to appear on the MSE website. I would use a broker recommended by a friend, family member or colleague. Speak to a couple of brokers ad look at their reviews etc.

Thanks for all the helpful advice!

They got me a DIP in 24hrs - this is why I'm a little suspicious as our DIP came back so quickly based on just a form we'd filled in showing our financial circumstances.

The broker first sent me a list of information he needed at 14.05. I'd only got as far as submitting the first form when at 15.19 he recommended a mortgage which we liked, then at 16.03 he came back with the DIP.

I assume the lender would have done a credit check too, but with such a fast turnaround and for the broker to then charge us £300 to do the full application, I got suspicious.

I've since been in n touch with Better though, who can get the same deal for us but with no fee, so I'm currently proceeding with their forms.

I think almost anyone can get a decision in principle just putting some basic information onto a banks website.

@isthisit83 those were my thoughts - he could have put an inflated amount in just to get the DIP, take my £300 to proceed, then when our real information goes in we risk not getting it and he keeps the money.

They have about 40 excellent reviews however.