Brits waste millions on unnecessary mortgage advice fees
Independent broker One 77 Mortgage has stated that despite the fact that all brokers receive a procuration fee from lenders for their work in arranging mortgages, an extra charge for ‘advice’ is levied on customers in approximately 75% of purchases — a practice it referred to as ‘double-dipping’.
It said that an additional fee, averaging £400, was ‘slapped on’ 926,220 of the 1,234,960 residential property transactions completed last year, setting consumers back a total of £370,488,000. One 77 also argued that many consumers don’t realise that mortgage broker ‘advice fees’ are not mandatory and they could save an average of £400 each by shopping around.
One 77 Mortgages confirmed it only takes the procuration fee paid by the lender, and its managing director, Alistair McKee, 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.”
Richard Bousfield, managing director of The Surrey Mortgage broker, told YourMoney.com’s sister title, Mortgage Solutions: “I think the way up-front fees have been characterised as ‘double-dipping’ is quite frankly sensationalist. I do charge a fee of £395 which is invoiced when the customer applies for a mortgage. I’m quite transparent to customers about this and as a professional, I deliver a good service. If people don’t want to pay the fee they are free to go elsewhere.
”There’s a lot of work involved these days in arranging a mortgage and this fee justifies my time. It should also be made clear that not all applications go through, yet I will still have done the same amount of work.”
However, in response, McKee said: “The issue of administration is a bit of a distraction. A lot of companies feel they need to charge additional fees because they are uncompetitive and have high overheads. But administrative overheads are a fact of life and we control ours tightly to remain competitive.”
David Hollingworth of London and Country, added: “We are the UK’s largest fee-free mortgage broker and have never charged a fee. Our customers clearly value the fact that we don’t charge them a broker fee in addition to receiving the procuration fee from the lender. Providing advice from across the market without a cost to them is something that brings customers back to us time and time again.
“Just as with any other fee, borrowers need to factor in broker fees to their assessment of what will provide the best overall value for them. Some may be happy to pay a fee but for advice to be readily available to as many borrowers as possible, we think a no-fee proposition remains crucial.”