All brokers receive a ‘procuration fee’ from lenders for their work in arranging mortgages, satisfying FCA and money laundering rules as well as getting the business across the line. But One 77’s experts hit out today at the “double dipping” rife in the mortgage industry that means an extra charge for ‘advice’ is levied on customers in approximately 75% of purchases.
That means 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.
Consumers - who can be charged as much as 1% of the loan balance for advice by brokers - don’t realise these charges are not essential and that in many cases a broker will negotiate these or back down on charging them altogether.
In many cases, brokers will not even raise them with their savvier or older clients, who are more likely to know that these fees are not set in stone. Instead some brokers will levy them on less experienced or younger first time buyers who know no different.
Alastair McKee, Managing Director, One 77 Mortgages, commented: “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.
As ever, it’s a case of buyer beware but, understandably, many less experienced buyers believe this is the norm across the board and that they have no choice but to pay. Many clients find it hard to believe that some brokers don’t charge broker fees. This is a costly misconception as that’s certainly not the case any more. If you shop around, there are a range of firms out there who don’t charge fees above and beyond what they receive from the lender and that’s exactly the way it should be.
Being paid twice for doing the same work is simply unjustifiable.”
