Home buyers wasting £370m from brokers ‘double dipping’ over mortgage fees

Home buyers wasted £370m on their property purchase last year due to mortgage brokers “double dipping” on fees, it has been claimed.

Mortgage broker One 77 Mortgages claims some advisers unfairly charge buyers for advice despite also getting a procurement fee from the lender for arranging a loan.

Alistair McKee, managing director of One 77 Mortgages, which doesn’t charge fees, claims “double dipping” is rife in the industry and claims the average broker fee charged to buyers is £400.

Based on 926,220 mortgaged transactions last year, he claims this means consumers could have been paying £370.8m unnecessarily.

He said: “It’s truly shocking that brokers are double dipping on fees in this way and stinging the consumer in the process. This is a colossal sum of money that’s being thrown away unnecessarily, in many cases by the people who can least afford it.

“As ever, it’s a case of buyer beware, but understandably, many less experienced buyers believe this is the norm across the board and that they have no choice but to pay. Many clients find it hard to believe that some brokers don’t charge broker fees.

“This is a costly misconception as that’s certainly not the case any more.”

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13 Comments

  1. PropertyX07

    Utter non-article about someone drumming up business for their own company.

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  2. Typhoon

    Agreed. Doesn’t anyone understand you have to pay for expert advice any more ? 

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  3. Tim Higham

    The mortgage offer itself says whether commission is being paid to the mortgage broker.

    So…..from today, we shall be specifically drawing this to our clients’ attention, and having them question whether they too are a victim of the above news story (quoting the above weblink too).

     

     

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  4. JAM01

    Brokers are entitled to charge for their expertise in helping customers secure the best individual deal to suit individual circumstances.

    Give away knowledge for free, and SELL your expertise.

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  5. Z197741

    Brokers are entitled to double charge? are they! But letting agents are not. Sorry guys think you might be next.

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    1. Typhoon

      Brilliant quote

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    2. g4lvo17

      They don’t double charge, and they are already more highly regulated and have to take professional exams to be able to trade, I know they are harder to do than any estate agency exams as I have done both including FPC 1,2 and 3 as well as Cemap. 🙂

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  6. drakeco75

    Some brokers charge some don’t, but they only get the commission when the transaction completes.  Which begs the question how a broker gets paid if the transaction falls through and they don’t charge a fee?

    I don’t have a problem with anyone charging a fee for their professional services and if I found it excessive I would go elsewhere.

     

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  7. g4lvo17

    What a joke of an article, financial advisors and mortgage brokers have had to comply with full disclosure for many years, this shows all commissions and fee paid to the broker including proc fees from lenders. The advisors own charges are set out in a terms of business letter that must be given to all clients prior to any transaction and state if any of these charges are non refundable and when they are due, I.E. upfront , on mortgage offer or on drawdown.

    Alistair McKee of One 77 Mortgages obviously doesn’t value his own time as highly as many other professional people do, and phrases such as “double dipping” are so chavy as to be laughable. I hope he enjoys his 3 minutes of fame ….

     

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  8. markbrev

    I thought it had been decided that the only way to ensure that the client got the ‘best advice’ was that he paid for it and that procuration fees were bad? If One77 don’t charge fees, are they only taking a procuration fee? If so, how can their clients be certain they are getting best advice?

    Of course the article ignores the fact that the mortgage broker’s Initial Disclosure Document (or Terms of Business to normal folk) discloses their fee level and if they receive a procuration fee. The mortgage Key Facts Illustration (or quote to anyone else) also shows if the broker will get a procuration fee. As does the Mortgage Offer.

    £370 million is a colossal sum of money. It’s also a b@#$**** sum of money in the context that his article is talking, making the assumption that every single mortgage transaction charged a fee – which would have been a good trick since a good proportion of the quoted 926,200 transactions would have been carried out direct by the lender, but hey!, why let objective facts get in the way? 

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    1. g4lvo17

      well put Mark, maybe he wants to be the PB of the mortgage world, perhaps his clients could use an online calculator and then go straight to the lender thus cutting out his commission hungry sales force ….. just saying 😉

       

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  9. MortgageCorey90

    markbrev makes a good point. We have to fully disclose anything and everything received. There is nothing hidden.

    A customer chooses whether they want to pay a broker a fee whilst being fully aware of the details. I would barely call this wasted. The broker fee is intended for the advice and service provided. The procurement fee leaves the client in no worse position as they aren’t actually paying the fee! They don’t see it reflected in monthly payments or interest rates. Most customers I see couldn’t care less about what the lender pays to us if it doesn’t affect them and everyone gets a full list of all lenders and exact percentage of procurement we could receive.

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  10. Dinamita76

    The broker only gets paid the proc fee once the transaction is completed, therefore nothing is paid for travelling out to see the client (or renting an office for the client to visit), sourcing the best deal and putting the application to the lender, under this particular firm.

    I’m quite flexible with my fees, product transfers paying full commission are FOC, partial commission are a small fee of £100.

    Remos and purchases are more, £150 & £200 respectively, according to the amount of work I have to do.

    I tend to just do one visit with the client rather than 2, getting all the documents copied in advance and sending the KFI via email… life Q’s over the phone.

    Gives me more time to see more clients and not spend fortunes on petrol. And remain low by comparison with fees.

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