Mortgage Broker Fees

[jamie_f]

Hi All,

I'm fairly new to property investing and wanted to canvas the group as to what the average mortgage broker fees are. I don't mind paying a fee for expertise but what sort of range do people expect to pay for a broker with full market access to buy to let mortgage providers and plenty of experience in property investing?

My wife and I are starting out using a sourcing and portfolio building service which granted, comes at a cost, but due to time constraints at the moment it's more important to us to get up and running rather than waiting for when we have more time.

Our first BTL property is currently going through legals and financing and whilst it has been quite a painless experience and undoubtedly less demanding on our time we are using the their recommended solicitors and mortgage brokers which may well be costing us more than it would normally.

I'd just be interested to know what other investors experiences are.

Many thanks.

Jamie

 

 

 

[EvolutionBlogger]

I think there is little justification to spend more than £500 on a broker for a buy to let

[Siruskey]

We have been using @Simon Allen  for quite a few years. There are fees involved but, they are very reasonable and well worth it. There are never any drama's. I provide him with the information he needs and i never have to do anything more. For example, my parents have their own portfolio and their own broker (because they dont listen to me). They recently had a mortgage refused as the property didnt have a valid EPC. That would have never been missed by Simon.

I tend to email him before i even offer on a property and let him have a look. More than once i have avoided buying after he spotted something that i hadn't considered.

I have never paid more than £500 and its money well spent. He does everything.

What are you paying the "portfolio builder" and what are they doing for you?

 

Craig

[jamie_f]

Thank you both Vineet and Craig (@Siruskey) for your responses.

As I suspected I am paying a little over the odds for the brokerage (a few hundred more) which I'll not be doing again, or at least if I use the same outfit I'll have a bargaining position to reduce the fee.

As I said it has been relatively painless and they have found a good 5 year fix at a good rate.

The handsfree service the portfolio builder is providing is just that, handsfree, bar necessary form filling for solicitors and mortgage. They are doing all the legwork. Once this first deal has completed  I can then gauge if the not inconsiderable fee is value for money.

The service provides the following:

• property search for off market discounted properties fitting the criteria of our strategy, dealing directly with the vendor.
• Once a prospect is found the offer is presented to us for consideration in a report which provides the numbers and conservative costs.
• Outlines any renovation required with costs to bring up to letting standard.

Once we agreed to proceed they provide a case manager who will:

• ensure we are structured correctly for tax efficiency providing access to recommended and regulated financial advisors if necessary
• manage purchase through to completion
• project manage the renovation to completion
• ensure the property meets all the legal requirements for letting providing necessary certificates (gas, electrics, smokes, carbon monoxide etc)
• manage relationship with insurance broker if needed
• manage search for tenants via recommended letting and management agents, ensuring necessary vetting/references and due diligence is carried out and legalities such as deposit protection are correctly handled
• manage the tenants into the property and hand over to the lettings management agent 

Only properties with strong fundamentals in the right areas that offer the best long term return in investment are considered by them and they guarantee a minimum return on capital employed for the the first 12 months.  

I'm not going to divulge the fee charged for this service at this point but suffice to say it is enough for us to carefully review cost to benefit ratio of this service once we are over the line with this deal and receiving rent regularly.

The only reason we are using this service is we just do not have the time available at the moment to market for off market discounted property, get to viewings and deal with all the necessary parties you would normally find in your team.

I realise this is not everyone's cup of tea but it works for us at the present time and honestly, it has not been a bad experience so far even though it is costing fees. Realistically, it would take 6 to 8 months from this point to have built up enough contacts to get going. We'd rather get a few properties over the line and cashflowing and gradually build a network so we can go it alone in a year or two.

 

But thank you Craig , I may well contact the broker you use for the next deal and see how he compares. 

 

[Siruskey]

Find one broker and stick with them. You really need to ensure the same information is being passed to the lenders each time. If moving between brokers you run the risk of the information not being the same and raising concerns.