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  • Buy-to-Let

    Mortgage broker vs dealing direct

    Hi Everyone,

    Just wondering what your thoughts are on the above.

    When I started, I used a broker as they have have access to all the best deals.....right?

    When I'm dealing with people, I always ask myself, what's in it for them? What's their motivation? If you were a mortgage broker (and I'm sure some of you reading this will be) and you had two mortgages that were suitable for your client, one at 3% and another at 3.5% and everything else equal (same fees etc) which one would you recommend to your client? I'm guessing that the answer to this is the one that pays you (the broker) the highest fee.

    Just recently, I've been doing the leg work myself and going direct to lenders. I find that the rates are much better and even if you do end up with the same 'product' (same lender, same interest rate, same lender fee) as a broker would have offered you you're almost always better off going direct because as the lender hasn't had to pay a broker for their services, they can give that money to you in the form of cashback or a free valuation etc.

    The advantage of using a broker though is they can sometimes save you a lot of time. Going direct can be very demoralising after the fifth 'computer says no' in a row. A broker can normally look at your circumstances and tell you exactly which lenders will and won't lend to you. In my experience not having to pay the fee that the broker charges me and getting the additional incentive from the lender (i.e £500 cashback) is definitely worth a few hours on the phone to mortgage companies.

    I'd be interested to hear what others have to say about this.
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    Hi Gary

    As a landlord and broker I' ll leave it to others to debate your question however I will answer your question about the commission received.

    Firstly there are no lenders out there that offer that kind of commission. The average is about 0.3%. I personally don't even look at the commission I receive until I have identified. the product that is right for the client and the property.

    I charge a fee for but I'm not an order taker. You will get advice from a good broker not just on the deal but also your property strategy.
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    Regards Simon Searchlight Finance

    Fulfil Your Property Ambitions

    01565 654005

    Searchlight Finance Ltd is authorised and regulated by the Financial Conduct Authority reference 743220.

    HMO Finance I Complex BTL I Bridging Finance I Development Finance

    Buy to Let I Portfolio Finance I Commercial Mortgages

    I made this at the start of last year - well over 383 mortgage prodcts now. HSBC still has about 8 BTL products:
    [Image: bankvbroker.jpg]

    Quote:I'm guessing that the answer to this is the one that pays you (the broker) the highest fee.
    Technically - mortgage brokers are not allowed to take this into consideration. This is part of the 6 Treating Customer Fairly Consumer Outcomes.

    At Bespoke Finance - this is put to the test on every mortgage Buy to Let or Residential. Their is a 3rd party that goes through our Mortgage Advice and assesses to ensure that the "best" product for the customer is chosen from the clients sourcing criteria. If they have found it is not; among other things no commission is paid to the broker.
    Its safe to say - as I would be the one responsible for following this up in the company. No broker at our firm will chose a mortgage product based on Procuration fees.

    Quote:you're almost always better off going direct
    I think you are incorrect; as most banks are moving towards Intermediary business. Intermediaries also have exclusive products unavailable elsewhere. In my mailbox this morning exclusives from Leeds and Skipton Building Society - to add to the list.
    I can only presume you had a "bad" broker - perhaps not part of Mortgage Clubs.


    --------

    So far you have had two mortgage brokers reply. I think you want the more landlord consensus.

    As a first time buyer I went to another mortgage broker to buy my first home. I am a mortgage broker - if their was a [secret] to getting lower fees - id of gone direct? .. No - Id rather go to a competitor than go direct to a bank.
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    I think it's most often best to use a broker as they do all the work of sifting lenders for you and lenders do change their deals often.

    I must admit to not using brokers the last couple of times I've bought, only because I'm very restricted as to who will lend to me. When I consider the two only competitive choices I have (more or less) it just seems easier to go direct, as there's one less 'link in the chain of communication' that way.

    Angela
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    Author of The Complete Guide to Property Strategies and The Complete Guide to Property Investing Success
    Learn more at http://www.completepropertysuccess.co.uk

    I also post property updates on my Facebook Page

    "It is the small decisions you and I make every day that shape our destiny" Anthony Robbins

    Hello Gary

    I would like to add to Simon and Adam's comments as follows;

    1) I believe that anyone who "uses" a Broker is already starting off on the wrong foot.

    We are there to help you, to provide you with access to lenders that you cannot access directly, we are there to do the full market research, liasing with underwriters who we can 'properly' discuss your case with and therefore get a positive decision rather than a 'computer says no', we are there to support your application and keeping in contact with the estate agents, letting agents, valuers, surveyors, conveyancers, accountants, etc., to ensure a tight management of the full process to a speedy and effective completion and we do all of this ... whilst leaving you to get on with your day to day business / job from which you can earn far more than the few hundred pounds you're paying your Broker. I note that you briefly acknowledge this at the end of your post, however I believe that the professional Brokers 'lot' sometimes needs a lot more clarification and transparent insight.

    In essence, we are not there to be used or products bought or, as Simon rightly says, to be given sales orders to - we are professional service providers under strict guidelines, regulations and rules, and our professional service is what you are benefiting from for a professional fee.

    2) Re Cashbacks and free valuations - Not sure why you think we don't offer these too? My last case of 2014 was an 8 property remortgage for an existing Client. The previous deals I have done for him he wanted to use his own (long term, family friend) solicitor, but this time I showed him the TMW fee free remo deals and this saved him £6k approx in legal fees.

    As Adam says, Brokers are Client centric and our TCF guidelines underpin our direction of always putting our Clients at the heart of our recommendations.

    Have you had a bad experience with a mortgage salesman? (different, of course, from a professional mortgage broker).

    Our Clients range from the 'newbie' BTL'er to the seasoned property investor, some with 100+ properties each - and they all request our professional services on a regular / repeat basis.

    3) the title asks "Mortgage broker vs dealing direct" - sometimes there is no choice;

    TMW
    BM Solutions
    Shawbrook Bank
    Precise Mortgages
    Platform Homeloans
    and the new lenders coming out this year, including today's announcement of the new BTL specialist lender, Fleet Mortgages.

    By negating the Broker's worth, you potentially miss out on better (best?) value deals that you can only get via a Broker.

    Gary, I am sure that you will get a balanced and honest view from the PT readers on this thread, although I'm not entirely sure whether your post was tongue in cheek or serious, but I also hope that the replies from the good Brokers on here so far is a welcome and refreshing insight that you may not have considered in the past.
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    Hi Gary,

    I did my first few mortgages direct with a major high street lender, and it probably cost me 24 hours of my life that I'll never get back.

    Since then, I've used a broker to take care of everything and have no complaints. As I see it, and as I work full-time, I am outsourcing the work to someone more familiar with the products and the market, and they are compensated for it through the fee from the lender. The fact he's a nice chap who can give me some advice along the way is a bonus.

    That said, I still do my own checks to make sure I am satisfied with the rate etc before we proceed.

    Cheers,
    Gus
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