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‘Brokers should be able to dictate their own fees’ – Star Letter 08/05/2024

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  • 10/05/2024
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‘Brokers should be able to dictate their own fees’ – Star Letter 08/05/2024
Each week, Mortgage Solutions and its sister title, Specialist Lending Solutions, pick the top comments from our readers.

This week’s comments come from the story: Halifax to introduce maximum broker fee cap

AALTO Mortgages Ltd said: “I can completely understand the objections of brokers here on principle; it’s tiresome having your business dictated by others. However, the argument that over £1,500 in broker fees ‘might be the best thing for the client’ in some circumstances is laughable.

“Firstly, it’s only relevant to regulated mortgages under £150,000, so no complex commercial deals, no high-net-worth or complex income structures, etc. Adverse maybe, but I honestly don’t really see why we think a bit of basic criteria would justify a broker fee two to three times the average, and three times the proc fee on the case, and certainly not with Halifax.”

They continued: “Secondly, no one moans when there’s a straightforward £1m mortgage and they get paid £4,000 for the same amount of work as a £60,000 mortgage. It cuts both ways.

“If you are really pushing to charge a client out of their own pocket £1,500 for a Halifax mortgage, amidst all the cost pressures clients are facing, can you be confident they are not vulnerable, because it sounds to me like they are being exploited?”

Terry Arch added: “Here we go. Not only do the Financial Conduct Authority (FCA) dictate the way brokers run their business (in some cases quite correctly), but another organisation dictates. Whilst I believe this is wrong, if any broker is charging more than 1% or £1,500 in most cases is probably adequate, however, in some complicated cases this may not be sufficient. Brokers should be able to dictate their own fees, like any other business.”

 

Self-employed mortgage choice has ‘never been better’

This week’s second comment is in response to: Self-employed mortgage choice has improved but under-served areas remain – analysis

John Yerou said: “The landscape for self-employed mortgage borrowers has never been better. 10 years ago, there were only a handful of lenders that assessed contractors’ earnings based on their contract rate. Now there are well over thirty lenders.

“Santander and HSBC need to get onboard and start thinking about assessing contractors based on their contract rate like their peers Natwest, Barclays, Halifax and Nationwide.”

 

Time remaining in contract key contractor criteria to be resolved

This week’s final comment is on the piece: Barclays improves mortgage criteria for contractors

John Yerou said: “One key [criterion] they still need to change is the time remaining in the contract. Most contractor-friendly lenders will accept one-month remaining; Barclays insist on three months, which is very restrictive, as most contract engagements are between three to six months.

“They also need to improve their affordability criteria towards umbrella contractors. The majority of contractors have switched to umbrella payment structures. They should look at what Skipton have done, it’s brilliant.”

 

The comments here are from our readers and do not necessarily reflect the views of Mortgage Solutions and Specialist Lending Solutions.

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