Why should I pay a mortgage advisor?
When you’re looking to get a mortgage or remortgage you’ll be faced with lots of routes you can choose.
One of the most debated subjects within the broker industry is the fact that some brokers charge a fee and some don’t.
Personally I think it’s an odd one the whole fee-free route in the industry. It’s a pile em high sell em cheap model. The mortgage broker will still get a commission for arranging your mortgage for you – which varies depending on a whole bunch of criteria, but will generally be in the region of £350 per £100,000 of mortgage.
They’ll also be extremely keen to sell you add on services. So arranging your solicitor for you, getting building insurance, pushing you towards life insurance and income protection.
Those are all important and valuable things to have, but how the sales process is for you can vary depending on how desperate the salesperson is.
A good mortgage broker should be on about £50k a year. So when you consider all that’s involved in the cost of arranging a mortgage and the taxes paid, that works out to be in the region of 30 cases a month for an independent fee-free broker. And can be as high as 60 per month for someone in a group.
That’s 1.5 – 3 cases every single day. Which doesn’t really leave you much time for customer service. It’s basically impossible if I’m being honest as an independent broker.
So the only way for the larger companies to make it viable is to have fairly cheap, low paid brokers in a call centre just fielding call after call all day long. Then have a team of admin people to process the mortgages.
So you might struggle to get through to the broker if you have any questions or queries. It’s easy for things to fall through the cracks and for your case to be forgotten about. They don’t have as much time to really think about your situation and whether or not what they are suggesting is the best product for you.
So you’ll often just get a standardised response:
What LTV% do you want over how long?
OK, then on that basis, the best 75% 2-year deal is X this week. So we’re putting everyone into that.
They don’t have time to take into account other softer facts and any of your individual, peculiar circumstances.
So what are your options?
Here are your 4 options for getting help with your next mortgage:
Option 1 – DIY
You can’t check the whole market, because some deals are exclusive to brokers. You won’t be given any advice, so it’s up to you to know what options are available and which one out of the hundreds you can choose, is right for you.
Option 2 – Tied / Multi-tied broker
Go to your bank and they can advise you about the products that their bank sells. Some multi-tied brokers can advise on the products of a couple of lenders, but still not every lender out there by a long way. So even if they know there’s a better product for you, they won’t and can’t advise you to go get that one.
Option 3 – Free Whole of Market broker
You get access to the vast majority of the lenders out there, and a broker that can place you with the lender that offers the best deal for what you’re looking for. But because of the high volumes of cases these companies have to process in order to make money, you may not get the most individualised of service and advice.
There’s sometimes been a question of whether or not you’ll be placed with the most suitable lender for you, or if they’ll place you with the highest paying commission lender… I’d like to think the professionalism in the industry stops this from happening, but I’m sure it’s happened in the past.
Once you’re in their system, they have a team of administrators that will handle your case, which can be great as that’s what they do all day long. But you may find that you struggle to get in touch with the same people each time, so if your circumstances are even slightly outside of their ‘normal’ parameters, you may find yourself frustrated with trying to find out where you are with your mortgage application.
You’ll also likely be hard sold additional products and services. Their own team of conveyancers, insurance products they are tied to, etc. These may not be the best on the market as they are often not whole of market protection advisors, so just have 1 insurer to push. Who usually pays them a very healthy commission.
Option 4 – Whole of Market broker
You will receive personalised, bespoke advice for your situation and your ultimate property goals. You will pay a fee for the service, and the broker will receive a commission from the lender as well, but in return for the higher cost, you can expect a much more individually tailored solution (which is what it says on my website!).
The cost can range from £395 up to £1495 or even higher, but if you are even remotely unique in what you need – or need additional time for things to be explained fully then you’ll find this will be the best option.
Here at Fogg Financial we do more than just help you get a mortgage, we are with you throughout the whole process.
We’ll get you set up with a mortgage that meets your needs and your long term goals – that’s a given. But we’ll also review what insurance and protection you might need to remove any fear or worry about the unexpected happening. But there is never a hard sell. We want you to first understand what’s possible, and then decide what’s best for you.
And then we’ll check in with you periodically to ensure the mortgage you’re on still fits your goals in the future.
Is there a best option for everyone? Of course not.
Do I think everyone should work with me as a Whole of Market advisor? Not even close.
As an independent advisor, we don’t want to compete on numbers with the bigger players in the industry. We much prefer getting to know our customers and have time to figure out what’s the best way to help.
Sometimes, it doesn’t happen often, if we aren’t the best-placed folks to help you out, then we’ll tell you so. We’d rather lose a sale now, but gain your respect and maybe work with you again in the future.
If you want to find out if we’re a good fit for you, then please get in touch below to find out more.