I was having such a productive Monday morning, the sun was shining and I was looking forward to a productive natter with a bridging company BDM.
Then it happened.
I was very kindly made aware of a weekend article in the Guardian about mortgage advisers, who – shock horror – were about to get paid the bank-busting sum of 0.20 per cent on mortgage retention!
Now, seeing as the journalist was probably shocked that a) mortgage brokers still exist, and b) we actually get paid for what we do, perhaps I shouldn’t have been so livid.
I’ve contributed to many Guardian articles about mortgages in the past, and I hope to do so in the future.
This article hurt though.
Mortgage advice is, quite rightly, heavily regulated. It protects clients, it protects the public from further bailouts to the ‘pesky banks’ and it protects some brokers from themselves.
As a result, running a mortgage advice business is not cheap.
We pay to trade – whether it be for regulator charges, network compliance charges, or industry levies to pay compensation to people poorly advised on different financial products by ‘other’ financial advisers.
That’s just so we can trade.
Then you’ve got normal running costs such as offices, staffing, professional indemnity insurance, marketing. The list goes on.
When the work actually gets done, we put in many hours of research time, in evenings and at weekends before advising the clients on the most cost-effective route to take.
No mortgage broker is going to get rich by earning £300 on a £100,000 mortgage.
Some mortgage brokers charge fees to clients for their advice, some don’t.
That choice is based on risk – will a broker risk their time, maybe for three or six months of a house purchase transaction, to potentially not be paid a penny from the lender should a mortgage not complete as planned?
Documentation is strict and potential clients are fully aware of any charges that could apply before they begin working with a broker.
Clients get full illustrations which detail the mortgage deal advised, and a mortgage suitability letter, sometimes nine pages or more in length.
If the best advice is for the client to take a deal that doesn’t produce commission for the broker, that’s what we do.
It’s about trust.
We can’t just ‘roll over’ a client to earn commission.
We have to provide detailed reasoning and evidence of research that proves that remaining with the existing lender is the most cost-effective route for the client to take.
We put the same amount of time and care into this as we would a full remortgage even if we get paid half of what the same lender would pay for a new client.
It’s also about the stuff we don’t get paid for.
The conversations with estranged married partners in tears, sat before us as their current high street lender won’t approve them for a request to transfer their mortgage to a new home because ‘lending policy has changed’ since they took the loan out.
We pick up the pieces.
Also, mortgage commission is roughly the same now as it was ten years ago, and the workload for a mortgage broker has doubled in that time.
It’s not a sin to earn money for your work, or for a lender to pay a broker for retaining their client for them.
I worked for high street lenders for more than 10 years before becoming a broker.
I used to go home at 5pm without fail then. Now I’ve lost count of the times I’ve missed bedtime with my daughters because I’ve had to work to 9pm or later to ‘make the deal happen’.
It is pretty off for an entire profession to be demonised because they expect, just like other professions, to be able to earn a suitable sum for their work.
Stuart Gregory is director of Lentune Mortgages