Mortgage Brokers -Commission from banks?

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leonkings07

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We're trying to get a 92% mortgage. A friend advised a mortgage broker to us - who we went to see. It is an indepentant broker (not sure if I can say name).

I asked him what banks he represented & how he received payment. He told me that he dealt with all banks. And that he did not receive payment from us but rather a commission from the bank which we decided to go with. He also said that all banks paid the same so doesm't matter to him which bank we choose.

My question is; Is what this broker is saying true? - That he would get the same commission from all banks, surely if one bank offered him more, he would try & influence us to go with them?
 
I dealt with a broker who at the end of the day got me the best deal available at the time. If your not happy with the idea of a broker then approach all the banks yourself...find out what they are offering and strike a deal.

I used a broker because I didn't have the time to go to each lender on the market, compare their offering and make a decision, the broker spent that time...and I didn't have to pay him a cent. He also saved me money by getting mortgage protection and house insurance cheaper then I had, again no work to me.

Eoin
 
The cost of taking out any loan is always going to be paid by the person getting the loan. May be dressed up or hidden in various ways, but in the end of the day its paid by the customer.

This always has to be borne in mind when using a mortgage broker. The money the bank pays the broker in commission doesnt materialise out of nowhere - the cost is passed onto someone and I bet it isnt the bank.

The question of whether or not to use a broker is a time v money issue. The time it takes for you to do the running around yourself and getting quotes from the various banks versus the amount you are willing to pay to have someone else do this task.

One big wrinkle in everything is that banks hate to lose long term customers. You can usually knock your own bank down significantly on any quote you get if you have done a lot of business with the bank and have a good credit rating. They will also usually match any quote you get from a competitor.

I'm the type of person who likes to look around and get multiple quotes. My personal experience is that, in the end, I've always got the best quote from my own branch of my own bank, even when competitors initially quoted lower. But I've always haggled with them in a meaningful way. In fact, once I did take out a loan with another bank for a particular reason, but my own bank then offered significantly lower and gave me the cash to pay off the other bank immediately and take over the loan - believe me, the other bank were well annoyed - didnt even earn a full month in interest out of the loan.
 
As a broker I can say that some brokers would get the same commission regardless of where the mortgage is places, as that broker could be part of a network of brokers that have joined together to get the same service/commission from every lender and as they are introducing volume to the lenders they can get this type of deal, the benefit to you in this case is that the broker is actually getting the same regardless of what lender they go to, and will be able to offer true impartial advise.
 
csirl said:
This always has to be borne in mind when using a mortgage broker. The money the bank pays the broker in commission doesnt materialise out of nowhere - the cost is passed onto someone and I bet it isnt the bank.
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While you may be correct, I am not aware that customers using brokers pay higher rates than customers who go to lenders directly (I am not a broker).
 
Thanks for you're responses. But I'm still not clear on whether Independant Brokers get paid the same commission from all banks?
 
I am a broker and deal with all banks - We get the same commission from these banks. A good broker will know immediately where tey will get the best deal for the client. There are some more competitive rates that only brokers will get otherwise the rates will be the same if the client approached the bank. The client does not pay any extra cost for using a broker. If the client moves their mortgage within three years the bank claws back the brokers comission.

Use a high profile broker - they will get you the best deal and save you a huge amount of meney.
 
all brokers get paid different amounts from different banks. Some pay 1% , some pay .7% and some pay .9%. My mate works for a broker, lets say AIB pay .7%, if that broker closes a certain amount with them, they increase it to 1%

1% is usually the max brokers will be paid. All brokers are heavily regulated by ifsra and are audited. Brokers must show ifsra when audited why they chose that specific bank for a said client, so it really is unlikey that a broker would favour one lender over another as ifsra wont stand for it. I mean some banks will offer more than others, and you may not have a choice of which bank in the end, it really depends on your own circumstances.

Try stick with the larger brokers, these would all have met their "targets" with each bank ages ago meaning they wouldnt favour one bank over another as they get paid 1% by all.

Try Cornmarket or Rea!
 
Stephenkelly said:
Use a high profile broker - they will get you the best deal and save you a huge amount of meney.
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How exactly will they save you a huge amount of money?

Do any lenders deal exclusively with brokers?
Do any lenders offer rates that are lower through brokers than would be the case if you went directly to a lender? Which lenders? At what sort of discount?
Do NIB deal with brokers?
 
The cost of taking out any loan is always going to be paid by the person getting the loan. May be dressed up or hidden in various ways, but in the end of the day its paid by the customer.

This always has to be borne in mind when using a mortgage broker. The money the bank pays the broker in commission doesnt materialise out of nowhere - the cost is passed onto someone and I bet it isnt the bank.
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Of course the customer ultimately pays for the commission that a lender pays the broker. It's factored into the interest rate that the lender charges. But the important thing is that if you don't go through a broker and deal with the lender directly, they simply keep that commission for themselves.

As has been said earlier - some brokers do get paid the same rate of commission regardless of which lender they place your business with. Others get paid different amounts by different lenders. One of the most useful questions to ask any mortgage broker is how the recommended product compares with the competition for your particular need.

(I am a broker.)
 
Marianne said:
But the important thing is that if you don't go through a broker and deal with the lender directly, they simply keep that commission for themselves.

(I am a broker.)
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What difference does that make to the person taking out the mortgage?
 
I have found most banks are willing to negotiate lower by going direct, obviously they know they are saving the broker commission - so they have a bit more 'wriggle room' to negotiate the interest rate.

Has anybody else noticed this?
 
Marianne said:
Of course the customer ultimately pays for the commission that a lender pays the broker. It's factored into the interest rate that the lender charges. But the important thing is that if you don't go through a broker and deal with the lender directly, they simply keep that commission for themselves.

As has been said earlier - some brokers do get paid the same rate of commission regardless of which lender they place your business with. Others get paid different amounts by different lenders. One of the most useful questions to ask any mortgage broker is how the recommended product compares with the competition for your particular need.

(I am a broker.)
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The role of a broker (and you should really know this yourself if you are a broker) is to absorb the front end costs - marketing, interviewing the client, collecting the paperwork, packaging the application and presenting it to the underwriter. This is why lenders pay brokers. There is no difference to the end product the client receives whether they go direct or via a broker. What is more important is for your broker to offer you access to all the lenders (which is all of them bar NIB) equally rather than the broker predominately using a 'favoured' lender. As long as the broker is giving volume business to all lenders they will be receiving 1% (or 0.9% from BoS) from every lender.

Sarah W (ex REA)

www.mortgagesoverseas.com
 
Thanks for taking the time to contribute Sarah-I was dubious of some of what was claimed in this thread.

Can you clarify one thing for me (you have pretty much said it above)-unlike, say, insurance, there is no hard financial incentive (i.e. to get better rates) for a customer to use a broker as opposed to going to a lender directly?
 
demoivre said:
What difference does that make to the person taking out the mortgage?
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That's my point - there's none. So you can go to a broker and get them to offer you a choice of lenders or go directly to each lender to find out their rates and if you qualify for the mortgage you want. Going to a broker doesn't cost you more.
 
The role of a broker (and you should really know this yourself if you are a broker) is to absorb the front end costs - marketing, interviewing the client, collecting the paperwork, packaging the application and presenting it to the underwriter.
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Yes I know this. What makes you think I don't?
 
CCOVICH said:
Thanks for taking the time to contribute Sarah-I was dubious of some of what was claimed in this thread.

Can you clarify one thing for me (you have pretty much said it above)-unlike, say, insurance, there is no hard financial incentive (i.e. to get better rates) for a customer to use a broker as opposed to going to a lender directly?
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Correct. However a good broker will know all the lenders criteria, their attitudes/preferences and who in the particular organisation to talk to if there are unusual circumstances. Also banks use slightly different terminology to describe their products which might confuse customers and they most definitely have a vested interests in selling 'add-on' products such as serious illness cover or redundancy insurance whch may not be appropriate. Finally with a broker you have one point of contact (or two once the file is passed to an administrator) rather than potentially dealing with up to 10 individual employers if you want to compare all the lenders yourself.

Sarah

www.mortgagesoverseas.com
 
Marianne said:
Of course the customer ultimately pays for the commission that a lender pays the broker. It's factored into the interest rate that the lender charges. But the important thing is that if you don't go through a broker and deal with the lender directly, they simply keep that commission for themselves.
Click to expand...

This statement led me to believe that you don't quite understand the dynamics/cost effectiveness of the role of a broker from a lenders perspective.

Sarah

www.mortgagesoverseas.com
 
So effectively the cost of the brokers fees is built-into the the interest rate charged to the customer? Has anybody gone directly to the lending institution and got a better rate directly as the broker fee would be waived? Whats to stop someone using a broker to get the best deal and then approaching that particular bank directly?

"I have found most banks are willing to negotiate lower by going direct, obviously they know they are saving the broker commission - so they have a bit more 'wriggle room' to negotiate the interest rate.
Has anybody else noticed this?" quote.
 
sheena1 said:
Whats to stop someone using a broker to get the best deal and then approaching that particular bank directly?
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Nothing-but banks may not be willing to make their brokers unattractive to deal with in too many cases, so you might not hear too much about it.
 
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