Contractor mortgage broker fees - is it worth it?

[dagenheis]

Generally 'Free' brokers get their fee from the lender. Upon application you sign the declaration that you are happy for the broker to take commission from the lender. So there are no broker costs to the applicant.

Paying for a fee does not necessarily mean that you'd be getting a special product. You need to shop around and ask each broker abour product/rates based on your requirements. I have been extremely pleased with Contractor Financials mortgage services in the past and they seem to have access to various lenders, but do check with different brokers as market/quality of service seems to change quickly.

Good luck!

[MichaelaE]

Thanks all. I ended up with Duncan at Freelance Financials. I dont know why I thought it was AS financials. I think I found FF from looking through this site. Someone asked us about the deal we have, its 1.69% for 2 years with Halifax. Although Duncan recommended another at 1.74% as overall its cheaper. I will let you know how it goes.

[northernladuk]

Thanks all. I ended up with Duncan at Freelance Financials. I dont know why I thought it was AS financials. I think I found FF from looking through this site. Someone asked us about the deal we have, its 1.69% for 2 years with Halifax. Although Duncan recommended another at 1.74% as overall its cheaper. I will let you know how it goes.

And this is why I was pleased with Freelancer Financials. They also recommended a slightly higher mortgage rate and broke the coats such as the arrangement fee down so I could see the higher rate actually cost me less over the period.

[Martin@AS Financial]

I went with as-financial and couldn't be happier with the service received. Speak with Martin. There's no charge for cuk members and I know I couldn't have got a better service had I paid for it. They also have access to specialist underwriters. It's the reason they were able to sort out my mortgage so quickly. If you want more info, feel free to pm me and I'll forward on the details

Thanks Evi - that's really kind of you.

[saptastic]

If you can get the same product through different brokers I would go with the supplier that has no fee.

I have used Contractor Money here IT Contractor Mortgages Information and Quotation :: Contractor UK

and they sorted me without need for any 'admin charge'. I assume they get kickbacks from the mortgage providers anyway

[Power Mortgages Ltd]

In the majority of cases mortgage brokers/intermediaries will receive a commission from the lender which they will keep.

Some mortgage brokers will also charge a fee for their services because it is all well and good if you are applying for a large mortgage where the commission is sufficient (mortgage brokers are businesses after all and have to make a profit to continue trading) but if you are applying for a small mortgage then quite often the commission the lender pays to the broker isn't enough to cover the costs of processing that mortgage when you consider mortgage brokers have to cover the time to transact the mortgage in wages/earnings, property costs, regulation costs, phone lines, stationary, utility bills for premises etc. You quite often find that brokers who charge fees charge a blanket fee of £x to each and every client to 'treat customers fairly'.

Some brokers offer an option where you either pay them a fee and they will give you the lenders commission back upon completion or you do not pay a fee and the broker takes the commission. Some use this model with a caveat to the amount of commission they will receive so if it is a small mortgage and the commission isn't a lot, then they may charge an additional fee to ensure they earn £x per mortgage application to cover their costs.

Some brokers who charge fees charge them upfront so if the mortgage doesn't complete (and it is not their fault) they cover the cost of the time they have spent dealing with it knowing they will not get the commission from the lender as it hasn't completed and some brokers will only charge their fees upon successful completion.

It is right to question why you would go for a broker who charges over one who doesn't but each broker offers a different level of service. I would suggest making a few enquiries if you are not quite happy with your initial conversation with the first broker and their fee charging structure so you can get a feel for the other brokers you speak to. How quickly they respond to your emails/phone calls, if they are never available when you speak to them, what the general feedback is on this forum regarding their services, as most, if not all of the Contractor Mortgage Specialist brokers would have feedback on here from the numerous contractors who have dealt with them in the past or currently. Different brokers work at different speeds, you may find ones that do not charge a fee shut up shop at 5pm whereas ones who do charge fees will work later and often respond to queries, emails and calls outside of office hours.

A broker who charges a fee may do so because they feel they are worth that fee. If they can justify that by providing you with a quick and efficient service and you are happy then you know you have made the right choice. Likewise if you feel you will get the exact same level of service from a non-fee charging broker and are impressed with them then that is great too. It is about what works for you and what you feel comfortable with so I would recommend speaking to a few brokers so you can then understand how they charge and get a feel for how you think dealing with them will be.

There will be clients who have opted for a non fee charging broker simply because they don't want to pay a fee but likewise I can assure you there are also clients who go the other way and will choose a fee charging broker over a non fee charging broker as they have felt it was worth paying the fee for the service they would get or they have been recommended by someone they trust who may have used the service.

We are Contractor Specialist brokers because that is what we specialise in. The majority of the mortgage applications we deal with are for contractors as opposed to non contractor specialist brokers who only deal with a handful, at best, of contractors. I would take this 'we have direct access to the special Underwriters which other non spealist brokers do not have access too' statement with a pinch of salt, to be honest. That may be the case on a very small number of occasions but the real benefit of using a specialist against a non specialist is that a specialist will know the in's and out's of the 'contractor friendly' lenders' criteria; which lenders are able to assist and what they require from you, the contractor. Non specialists may know that Halifax do contractor mortgages for example, because they are the biggest contractor friendly lender, but you could be signing up for a Halifax mortgage just because the non specialist broker does not know about criteria offered by other lenders who may be contractor friendly who can offer better rates.

Specialists will also know the exact way to submit and handle the mortgage all the way through the process and how to deal with and rectify any issues or queries which may come up. If you had a complex electrical issue in your property, would you want a handy man who may be a jack of all trades, master of none who may have dealt with an electrical issue once or twice in the past or a fully qualified Electrician who will know exactly how to deal with things and sort it out?

However, the one final point I will make is for you to not make the mistake of thinking that just because you are a contractor that you need a contractor mortgage based upon your contract rate. That may be the case if you are unable to prove your income in the conventional manner (you do not have any finalised Limited Company accounts for example) but I have done many mortgages for contractors where the fact they are a contractor is neither here nor there for the mortgage application process as they have the accounts to prove their income in the conventional manner and we have been able to get them a more competitive mortgage assessing them as a Limited Company Director.