Advice and choosing your advisor
DATE: 25 October, 2021 // Read more from the Blog »
How do advisors get paid?
Should you want to buy a house and require a mortgage to help fund it you will need to start by finding an advisor. There’s plenty of us about but finding the right one may not be as simple as you’d think. You can go to a bank or building society to arrange it direct or you can look for an independent. Independents are paid a procuration fee by the lender they submit the mortgage to, its paid after you complete. As a house purchase can take 3+ months it can be a while before they get paid. Many advisors will charge a fee for arranging a mortgage, these vary from firm to firm, £500 is pretty standard but they can be lower or as high as £3000! The procuration fee can be seen on the first page of illustration document, it is typically 0.3-0.4% of the loan amount so for a £100,000 mortgage the payment will be £300-£400. It differs from lender to lender; it can also differ for porting, product transfers & buy to lets too. We don’t charge for arranging mortgages so if you want a mortgage and don’t feel like paying someone who is already being paid by someone else, get in touch. The office number is 01757 709888 or email firstname.lastname@example.org. The fees charged differ for a variety of reasons, some advisors don’t do enough business to survive without. Some have to pay referral fees to the person who introduced you e.g. an estate agent. Some charge a lot because they can, others because for the most part it is the norm.
Which type of advisor do I need?
In our opinion, what you really want is an independent, whole of market advisor like ourselves, these individuals aren’t restricted to a limited panel of lenders like a lot of advisors, they’re able to submit mortgages to any mortgage lender accepting applications from intermediaries. That being said not all lenders accept mortgage applications from intermediaries for example Lloyds Bank, Yorkshire Bank & Yorkshire Building Society. We are whole of market, and whilst we are not able to submit mortgages to these lenders, we are able to submit them to parts of their groups which is odd in itself. For example, Yorkshire Bank is a trading name of Clydesdale Bank, as is Virgin Money. We can submit business to Clydesdale Bank and Virgin Money, but not Yorkshire Bank. I don’t have an answer as to why this is but I believe it’s either because they haven’t got the capacity to deal with the volumes they could receive or they want to try and keep themselves exclusive. Given that 70-80% of mortgages in the UK are arranged through intermediaries like myself I very much feel it’s because they don’t think they could manage the potential influx they could receive. Again, like with the Yorkshire Bank, we can’t submit business to Lloyds Bank, but we can other members of the Lloyds Banking Group such as Halifax, Scottish Widows & Birmingham Midshires. As with Yorkshire Building Society, we can’t send them business but we can send business to Accord and Norwich & Peterborough Building Societies who re part of the same group.
Can I get a mortgage without advice?
It is possible to get a mortgage without getting advice, this is called ‘Execution Only’. There are very limited means of attaining an execution only mortgage, in fact there are 4 of them. 1 is that you need to be a qualified, authorized, approved & practicing advisor. The 2nd is one of the applicants needs to have a minimum net (after tax) annual income of at least £300,000 per year so for 2021 you’re talking around £545,000 before tax, so obviously there’s loads of these people about. 3rd they need to have net assets of £3,000,000 so again, loads of those folks about. The other is you do it online with no help from anyone. Not all lenders will allow execution only mortgages too so you may be limited on options should you want and qualify to. The above may make you think, if the regulator feels these are the sort of people that don’t need advice, even if you do qualify as eligible, do you really want to do it? Perhaps instead of dealing with the stress and hassle yourself get somebody else do it, and given there’s an option that doesn’t cost you, I feel it’s a no brainer. Just give it to me or one of my colleagues to sort it out for you.
Do I need a solicitor to buy a house?
Whilst technically no, in reality yes. I understand if you’re buying a property cash and don’t care for somebody to check the key legal points such as who owns the property and that you will own on it legally on completion, then no.
But, if you do want to know the person you’re buying from legally can sell you it and want to know that after you’ve paid all the money that you will own it, then yes you will need one.
Anybody buying a house with a mortgage the lender will insist that you have a solicitor involved that is on their panel of accepted solicitors/conveyancers. If they aren’t on the panel, they either need to apply (which is often a slow process), or you can use a different solicitor or you can organize dual representation. In the latter, you can use who you want and the lender will instruct another that they trust and you will be fortnight bill for both, so not a popular choice.
There are a variety of reasons why a solicitor/conveyancer are not on the panel. It could be that they haven’t done business with them for a period of time e.g. 12 months and they just need to refresh their details, in this scenario its usually a quick fix.
Sometimes the solicitors aren’t on the panel as they haven’t tried to do business with them before or they may not qualify. In my opinion with the smaller lenders its more its more understandable that a firm hasn’t worked with them before, but when it’s a major lender and they aren’t on panel for me this would be cause for concern.
How come IFO are able to charge no fees yet other business’ aren’t?
Whilst we haven’t asked why other advisors charge, it is generally considered the norm to charge. We don’t, as we feel we are paid enough to manage without. We understand we do considerably more business than the majority of advisors which helps. We also find that by not charging, people come back, they recommend their friends and family and we thrive as a result.
There are advisors who deal in the messy areas that we don’t want to get involved in, but before you contact them its probably worth speaking to us first in case its not as bad as you think (or they say). We’ve seen circumstances where people have been charged £2,000 for a mortgage for being “adverse” that wasn’t and we could have done at no cost with ease.
How do I know you can get me the best deal?
In our appointments we do everything in front of you including the research, we will even show you the screen so you can see all the lenders. As we’re whole of market to the whole of the UK some lenders will show up that you’re not eligible for example they may only lend in a certain geographical location. Some you may want to avoid because you don’t know or like them, either way we’ll have that conversation with you so you understand as much as possible, as much of the time as possible. This way you will see for yourself which is the most competitive, and if the most competitive isn’t a good option for you we can talk you through the reasons why. We do this to try and be as transparent as possible so you can feel involved and understand what and why we’re making the recommendation.