Most of us must have had those types of phone calls from clients who have been quite far down the line with another broker before picking up the phone and calling yours truly.
If you are like me and are in the business to genuinely help people, then it is hard to turn down potential clients even though you just know it is unlikely to be plain sailing.
So, why do clients feel the need to change mortgage brokers?
Not meeting client expectations seems to be the obvious choice and that can be for a variety of reasons, some of which I understand may not necessarily be the fault of the broker.
Apart from a bit of essential historical information from the client about the service they were provided previously, it should be a case of business as usual and forget the antics of the previous broker. But for some reason, it isn’t.
You see, the slightest of clues can help place the case in a market where there could only be one or even two lenders at most willing to consider an application.
Any damage done?
Without being too distracted from the job in hand I find myself looking for reasons as to why things did not work out and what damage if any was done.
These clues can potentially help you take the case forward.
Proceed with caution though as clues can make you incorrectly assume, and we all know what assuming does.
I also tend to take it with a pinch of salt when the client says the broker was lazy and could not be bothered, but could there be more?
Did the previous broker do a really good job? Was the broker motivated to do their best?
At the very least client expectations were probably not met otherwise the client would still be speaking to their original broker and not me.
£1,995 fee up-front
Recently I received a call from a distressed client who asked if I could help with his mortgage.
It was an area of specialisation for me so I agreed to help as I had experience which could benefit the client.
I discovered that the broker concerned had not only done a decision in principle with the lender but also went on to place the full mortgage application just to get a decline for not meeting basic criteria.
On top of this, the adviser had taken a broker fee of £1,995 up-front as well as extra fees for conveyancing and valuations, all of which were apparently non-refundable.
If the broker had done his job properly he would have researched the case and found out at an early stage before applying that the chosen lender was unsuitable.
Homeless threat
In as many days I received a second call from a client who was at risk from being made homeless if she did not progress with buying a property that she lived in. The landlord was under pressure to sell.
I put aside claims that the broker had lost interest and got on with the job in hand but was puzzled why the broker went to a non-risk-based lender when the clients had settled defaults on their credit report.
So it was no surprise when the client informed me that the application had been declined and that she had to find another solution.
It was not easy because the case was high loan-to-value (LTV) but we successfully placed the case.
I later asked the client to compare the service that we provided and was shocked to discover that the previous broker had submitted the application without collecting in all of the required information and documents.
It seems that there was a half-hearted attempt at completing the fact-find and the broker’s secretary called to complete a budget planner and that was that.
Buying a house is one of the most important milestones for a family and failing to secure a mortgage when they fit criteria with the right lender is just plain criminal.
The consequences for the family both short and long term can be damaging, to say the least.
Happens all the time. Many brokers want the easier vanilla re-mortgage or purchase cases but don’t like putting in hours of extra work for the Self builds, adverse clients, RTB, Ltd Company BTL’s, Expats and lending into retirement cases. Can’t say I blame them. I wonder why I seem to pick up all of the above which can take 4-6 months to complete and take up at least double the paperwork and time of a normal re-mortgage. Fail rate is higher than average as well so your KPI’s at the end of the year don’t look as good as someone in the office picking up clean cases. It gives you a good feeling when they complete and clients are always very happy and amazed it’s happened when other brokers gave up but the extra work load doing 6 days and reduced bank balance don’t make me feel any better come payday when some broker work less hours and get paid more.
We hear this continuously from clients. One very similar to the one you mentioned actually, only last week – with the £1995 upfront fee. The broker even profited / marked up the valuation fee and took payment for that even though when I did a sly FCA check they didn’t have authority to handle client funds… The property would be deemed back to back and I explained baring a couple of none mainstream lenders like Together, wouldn’t lend at the full market value (BTL). They’d sent the application to Paragon finance… Absolute cowboys. Although like you we always take these sorts of whines from clients with a pinch of salt, usually more to it than is told to us, however regarding the one above, no excuses. The clients had been totally forthcoming with all the facts. Shameful these types are still getting away with robbing people.
I find it difficult to understand why brokers would ask for a fee before at least getting a decision in principal. I know that we all experience the client who wants to know the lender as soon as you find a solution, as clearly most just want to use your knowledge and then cut you out, and upfront fees do tend to counter that problem, however an AIP should at least be done before asking clients to dig into their pockets for non refundable fees.