Mortgage Brokers - what do they do?

[Don_08]

In the past have tended to go through the banks myself - shopped around for best rate etc.

In buying this house ( which is a holiday home) , I've contacted a broker to see what they can do for us on both a new mortage and a remortgage. He hasn;t yet given me any quotes, and wants us to get all paperwork together before we do - which I'm finding a bit strange. We have most of it - just waiting on one salary cert.

We won;t have any problem getting mortgage approval with our salaries etc, so its really a good deal I'm after.

I've looked through a few threads on this, and I understand that they don;t deal with all the banks - but surely I could get some indicitive rates before the paperwork is completed?

 

[liketoknow]

when i bought my house ( now sold ) we employed a broker who did all the work, we didnt get charged because he was paid a fee from the actual mortgage company, ( around 3 k) for placing the mortgage with them .

 

[copperie]

i've got one mortage direct, 1 with broker and am about to go with a broker the third time for build mortage. i find the borker good as once they have all relevant docs they will get you the best deal, explain everything you may not understand in terms of the details, but most importantly for me they want to get you the mortage you want because they are essentially commission/finders fee based so you can be straight up with them and get them to press for better deals with the banks

 

[LDFerguson]

A broker should be able to give you indicative rates before you put together paperwork. However, s/he may be reluctant to do too much work until you show some commitment to doing the business with them. Hence the request for documentation may just be an indication that you're serious about doing business with the broker and aren't a tyre-kicker.

If a broker tells you who has the best rates and deals for your requirements up-front, what's to stop you using that information and going to another broker or direct to the lender to place the business? I'm not saying that you would do that, but it's possibly what your broker is guarding against by asking for documents first.

 

[emul]

I am a satisfied customer of a broker, infact the previous poster Mr. Ferguson. I rang him last year about income protection and ended up switching my mortgages with his assistance. He was able to give me an indication over the phone of what I could save, and an email later to confirm - based on the figures I gave him!! Whether with a broker or a bank I would have said you will need all that paperwork at some stage, but an indication should always be possible.

 

[dobbins]

Well, i'm gonna disagree with the other posters. I'm in the process of getting a mortgage and have contacted brokers and banks directly and can see no advantage in going with a broker.

In fact, the best mortgage rate that suits my needs is with National Irish Bank and they don't deal with brokers, you have to go with them directly (i'm open to correction but I'm pretty sure that's the case). None of the brokers I talked to mentioned this.

This is my first mortgage and when I started the process I presumed that the brokers have access to rates that the general public do not. Otherwise why do they exist? But this is not the case, they can only get the same rates as anyone walking into a branch off the street.

Fair enough they know all the rates from all the lending institutions but surely if you're committing yourself to borrowing 6 figure sums the least you can do is spend a few days ringing around and getting the best rate yourself.

cotterie, you said in your post:
"most importantly for me they want to get you the mortage you want because they are essentially commission/finders fee based so you can be straight up with them and get them to press for better deals with the banks"
i disagree with this - if i was a mortgage broker i wouldn't necessarily want to get the best rate for my client but rather the highest commission for myself. As far as I know there are no laws that say the mortage broker must get the best rate for their client. Nothing wrong with this, everyone has to make a living but it's something prospective clients should keep in mind.

Also the original poster stated that the MB he's talking to is asking for all the paperwork before he gives you a quote. What a load of bull! He should be able to give you a quote over the phone based on the most basic of details. If he's not prepared to do this then go to a different broker - there are loads of them out there or go directly to the banks as I have and possibly save yourself money.

LDFerguson, you said:
"If a broker tells you who has the best rates and deals for your requirements up-front, what's to stop you using that information and going to another broker or direct to the lender to place the business?"
The answer is nothing. The person seeking a mortgage is not out to make sure that the Mortgage Broker gets his commission - he's out to get the cheapest mortgage for him/her. You are condoning deliberately holding back information from your prospective client until a time that suits you to increase your chances of getting his business. Again, nothing illegal there, but hardly encourages you to go through a MB.

Also, LDFerguson, as this is a discussion relating to mortage brokers you probably should have mentioned in your post that you yourself are a mortgage broker as revealed in the post by emul. I have read many of your posts on this site and you give helpful information but I think it's a valid point in this instance.

Having said all that I know many people use MBs and get good rates through them - I'm just saying that at the end of the day they are salesmen / women and, in my experience, can't get you better prices that you can get yourself and, in my case, couldn't get me the best rate (which I would never have known without ringing around).

 

[slinky]

I can cite 2 occassions where the AIB would provide me a smaller mortgage when I went direct as opposed to a broker going to them for me.

 

[DrMoriarty]

Also, LDFerguson, as this is a discussion relating to mortage brokers you probably should have mentioned in your post that you yourself are a mortgage broker as revealed in the post by emul.

Liam has been around this site contributing helpful advice* (for free) for a very long time and most users of the site would be well aware of his status as a broker.

*See for example the collection of key posts and links he put together for this forum.

 

[slinky]

I had no idea he was a broker, so the heads up is appreciated.

 

[dobbins]

"Liam has been around this site contributing helpful advice* (for free) for a very long time"
Fair enough and fair play to him (genuinely) - I acknowledged that in my post.

"However, and most users of the site would be well aware of his status as a broker. "
Doubt that. I am a user of this site and I didn't know that. And even if it were true that most users knew this, he should still mention it.

LDFerguson, if you're reading, I know you provide a lot of helpful and useful info on this site. My point is still valid though.

 

[LDFerguson]

if i was a mortgage broker i wouldn't necessarily want to get the best rate for my client but rather the highest commission for myself.

If you were a broker and operated to such standards, you would find that you would get very little referral business from existing clients and in today's competitive market-place you would probably go out of business fairly quickly.

Otherwise why do they exist?

Because many clients do not have the time or inclination to research ten or twelve possible lenders, each offering at least half a dozen rate options and subtle differences between ostensibly similar products, when they could go to a good broker instead.

There also the service issue - would you prefer to have the same point of contact from start to finish on your application or would you prefer dealing with lenders' call centres to whom you are little more than a customer number?

If another lender happens to undercut National Irish Bank's rate before your mortgage completes, will National Irish Bank advise you of this?

As far as I know there are no laws that say the mortage broker must get the best rate for their client.

There are several. The Consumer Protection Code governs all mortgage brokers and it's a fundamental part of this code that the broker must act in the best interests of the client. The Financial Regulator routinely audits firms and if a broker is found to have recommended a product that wasn't the most suitable from the range available to the broker, there can be consequences.

None of the brokers I talked to mentioned this.

No broker will get paid commission by National Irish Bank, but the list of lending institutions that a broker can access must be disclosed to the client before any advice is given. This is uaually done on the Terms of Business letter. Did you get this from brokers you contacted?

The person seeking a mortgage is not out to make sure that the Mortgage Broker gets his commission - he's out to get the cheapest mortgage for him/her. You are condoning deliberately holding back information from your prospective client until a time that suits you to increase your chances of getting his business.

Do you think that a mortgage broker should research the best available mortgage for you, and give you out that information for free?

Also, LDFerguson, as this is a discussion relating to mortage brokers you probably should have mentioned in your post that you yourself are a mortgage broker as revealed in the post by emul. I have read many of your posts on this site and you give helpful information but I think it's a valid point in this instance.

I've been contributing to Askaboutmoney in my own name since it started years ago. I often sign off posts with my website address. I presumed (after over 1,100 posts on this version of Askaboutmoney.com alone) that most users were aware I am a broker. However, I agree that in a discussion about mortgage brokers, it is relevant information that I am a broker and I apologise for not making this clear in my earlier post.

 

[LDFerguson]

Although my occupation has always appeared on my User Profile, I have now amended my profile to include my website address, so it will be clear from any future posts what I do.

 

[LDFerguson]

Bugger. That didn't seem to work. Any ideas?

 

[dobbins]

I've been contributing to Askaboutmoney in my own name since it started years ago. I often sign off posts with my website address. I presumed (after over 1,100 posts on this version of Askaboutmoney.com alone) that most users were aware I am a broker. However, I agree that in a discussion about mortgage brokers, it is relevant information that I am a broker and I apologise for not making this clear in my earlier post.

Fair play. I look forward to reading the next 1,100!

 

[carrielou]

Fair play is right.

Might be in touch soon cos I really do not have time or the patience for spending countless hours and days ringing around when I can get someone to do it for me at a reasonable cost.

I used a broker for my last mortage and it was brill!

 

[DerKaiser]

Brokers aren't necessarily the best option. If you're getting a mortgage well within your salary limts you will probably find the best quote by spending an hour trawling the net and dealing with that bank.

If, however, things aren't so straightforward it's easier to let the broker do the legwork. Usually the banks pay their commission and will not give you any worse of a deal than a direct customer.

I personally knew the best rate available but used a broker to find who'd lend me the best multiple. I would have had to do a lot of bargaining with several banks to achieve what was effectively provided for free for me by the broker.

 

[ailbhe]

We were turned down for the mortgae we requested by our own bank and one or two others due to remortgage LTV (approx 85%), 3 others due to salaries ( 5 years salary) and another for reason undisclosed.
We went to our broker and had mortgage approval in 2 days.

I should point out that I work in an insurance brokers which has a mortgage broker/life office included though I do not work in that section. But, we used a broker for our first mortgage too and I wasn't working there at the time. It was a complicated application and we were able to go to the broker and lay all the cards on the table and let them find a way around it

 

[amtc]

I used a broker on my first home and direct to my bank on second - found it SO much easier the second time. No accountability with broker and passed round three different people, whereas one visit to branch and sorted for second.

 

[LDFerguson]

I used a broker on my first home and direct to my bank on second - found it SO much easier the second time. No accountability with broker and passed round three different people, whereas one visit to branch and sorted for second.

To be fair, you evidently dealt with a poor broker and a good bank. There are countless posts here on Askaboutmoney alone where people have had poor experiences with banks. Great experiences with brokers. Poor experiences with brokers. Great experiences with banks.

I think that proves the point that service levels will be different depending on whether you go to a good broker, bad broker, good bank, bad bank etc. That's the same of any industry.

But it doesn't prove that in general, going to a broker is better than going to a bank or vice versa.

 

[dobbins]

Liam, sorry, only getting a chance to respond to you properly now.

If you were a broker and operated to such standards, you would find that you would get very little referral business from existing clients and in today's competitive market-place you would probably go out of business fairly quickly.

I'd love to think that were the case but I'm don't know whether it is to be honest. I'm sure there are a lot of unscrupulous mortgage brokers out there, earning a lot of money for themselves, taking advantage of those people that are too lazy to or feel incapable of shopping around themselves. That's not to say all or even a majority are unscrupulous, yourself included.

Because many clients do not have the time or inclination to research ten or twelve possible lenders, each offering at least half a dozen rate options and subtle differences between ostensibly similar products, when they could go to a good broker instead.

If someone is committing themselves to paying hundreds of thousands of euros in interest for decades of their life, surely they can make some time to make a few phone calls and look at a few websites (including parts of this site!) to minimise their repayments.

If someone doesn't have the inclination to do this then god help them - they're either very rich or very foolish. Why not just go to a "house broker" and get them to pick out a house for you to buy in the first place!?

There also the service issue - would you prefer to have the same point of contact from start to finish on your application or would you prefer dealing with lenders' call centres to whom you are little more than a customer number?

Well, I'm dealing with one person for my mortgage which I'm getting directly from a bank. Even if I had to deal with a call centre it wouldn't bother me that much if I'm saving myself loads of money.

If another lender happens to undercut National Irish Bank's rate before your mortgage completes, will National Irish Bank advise you of this?

Of course not. But as stated in a previous post, the mortgage brokers I dealt with never told me of the lowest priced mortgage available to me in the market place at the moment. If I had gone with one of them rather than spending an hour or 2 on the web, I would be paying a bigger mortgage than I am now.

There are several. The Consumer Protection Code governs all mortgage brokers and it's a fundamental part of this code that the broker must act in the best interests of the client. The Financial Regulator routinely audits firms and if a broker is found to have recommended a product that wasn't the most suitable from the range available to the broker, there can be consequences.

That's good to hear. Does this actually happen - have unscrupulous brokers been prosecuted, fined, put out of business, jailed?

Also, "the range available to the broker" is not the same as "the range available to the client".

No broker will get paid commission by National Irish Bank, but the list of lending institutions that a broker can access must be disclosed to the client before any advice is given. This is uaually done on the Terms of Business letter. Did you get this from brokers you contacted?

No, all contact was on the phone or via email. I dealt with 3 brokers and none of them said which institutions they dealt with / didn't deal with although, in fairness, I didn't ask.

Do you think that a mortgage broker should research the best available mortgage for you, and give you out that information for free?

Yes. If they can get me a better rate than I can get elsewhere then I'll go through them. If not, I won't.

I've been contributing to Askaboutmoney in my own name since it started years ago. I often sign off posts with my website address. I presumed (after over 1,100 posts on this version of Askaboutmoney.com alone) that most users were aware I am a broker. However, I agree that in a discussion about mortgage brokers, it is relevant information that I am a broker and I apologise for not making this clear in my earlier post.

Have already replied to this but just to say I know you are a great contributor to this site and have helped a lot of people.
Some people have argued that brokers suit their needs and fair enough - if you can find a good, honest one (like Liam seems to be) good for you. My point is that a broker does not get you anything that you can't get yourself with a minimum of research and, in some cases (mine, for example), will end up costing you more money than is necessary while earning a nice few grand for themselves.