Homeowners in Norfolk and Suffolk could be wasting more than £116 million on unnecessary mortgage broker fees, it has been claimed.
Dismayed by the number of mortgage brokers in the region that are still charging fees for advice or arrangement of mortgages, Boon Brokers is reminding consumers that they do not have to pay broker fees when applying for a home loan or remortgage.
The Money Advice Service has assessed the average mortgage broker fee to be £500* – but it can be significantly higher, with figures of £1,500 not unusual.
Whilst many consumers assume that broker fees are the norm, Boon Brokers, which is based in Bungay, is urging aspiring borrowers to question what fees they will incur when arranging a mortgage and why they are needed. This is because all mortgage brokers in the UK are paid a ‘procuration fee’ by the lender upon completion of a mortgage application. Almost a third of all properties in England are occupied by homeowners with a residential mortgage (30.4 per cent**). This means that an estimated 230,000 homes in Norfolk and Suffolk are charged with a secured residential home loan.
Gerard Boon, a partner of Boon Brokers, said: “It’s staggering that homeowners in Norfolk and Suffolk could be losing more than £116m in unnecessary fees. We want to ensure that people understand the process and what they should expect to pay.
“Mortgage brokers should not have to charge fees for either advice or arrangement, but many do in our region. We do not see the need to charge client fees at any stage of the process for mortgage or insurance cases. Our lack of a fee does not limit the mortgage products that we can offer. This is because we are directly authorised by the FCA with whole-of-market access. Therefore, we can provide people with access to every mortgage provider and mortgage product in the UK.
“Paying a broker fee does not guarantee a better service – there is no correlation between the quality of service and broker fee charged. Some of the most efficient mortgage brokerages in London do not charge a client fee. The only purpose of the broker fee is to increase the firm’s profit margin.
“At Boon Brokers, we understand that mortgages can be confusing. Though we offer free home consultations with no obligation to proceed with our services, other brokers may charge even if no further action is taken. We strongly believe that this is an unethical practice that preys on consumers’ lack of knowledge regarding a broker’s payment structure with lenders.
“Many borrowers believe that they have no choice but to pay a broker fee. This is because they are unaware that other brokers, such as Boon Brokers, can offer a high quality service with no client fees. They are also unaware that brokers receive income from other sources aside from their client fee. It is time that the region caught up with other areas in the country where more brokers are starting to offer a no-fee service.”
For more information about Boon Brokers go to www.boonbrokers.co.uk