|One of the things that bothers me about the mortgage industry is the number of unscrupulous brokers that operate in this market.|
Talk about giving the industry a bad name!
I worked for a mortgage lender until quite recently and I used to be shocked at the fees that brokers charged their clients.
I mean lets put this whole "mortgage arranging" thing into perspective.
Assume I am meeting a client today. The guy walks into my office and sits down and has a chat with me about getting a mortgage.
It appears that he is not a "clean" client as he is suffering from a few credit problems. Well, I stroke my chin and let out a couple of sighs but wait, I CAN HELP HIM.
I tell the client that it is going to be difficult but I think I can help him. There may be a few "fees" but hey, at least he is going to get a mortgage and that is all he cares about isn't it?
So, he needs to borrow £150k. Because of ALL the work I am going to have do I am going to charge him a competitive fee of 3% of the loan amount. That's right, £4,500!.
But, he does have credit problems and he is going to get a mortgage and that is all he cares about right?
Oh, and the £4,500 doesn't have to be paid upfront because all we will do is add it onto the loan amount. So that's ok ,right?
Ok I am talking about a hypothetical situation but this is one that is repeated everyday throughout the UK. In my opinion it is nothing more than robbery and shows scant regard for the clients wellbeing.
How can anyone justify charging that to a client that will already have to pay a higher interest rate than a clean client would.
So, to recap, the £150k loan now becomes £154,500 and that is before you even get to the solicitor and arrangement fees, let alone the Mortgage Indemnity Premium (MIG.
So, the rule of thumb here is a simple one.
Ask your broker to justify their fees and if you find anyone charging a fee of more than 1%, walk away. Quickly.
About the Author
Anthony Harrison owns a mortgage and finance broker based in the UK. He has over 16 years banking experience and is passionate about offering free, financial advice. Visit him at http://www.capitalmortgagesolutions.co.uk
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