Speaker 1: Bloomberg Audio Studios, podcasts, radio News. John.
Speaker 2: As you know, we are doing more and more on housing.
Speaker 2: We've got a full series underway, and we've got another
Speaker 2: very special guest today. Today we are speaking again, by
Speaker 2: the way, with Ray Bulgium. Ray is the senior mortgage
Speaker 2: technical manager at independent mortgage broker John Charcoal and is
Speaker 2: something of an authority within the mortgage industry. Ray, welcome,
Speaker 2: Thank you for joining us.
Speaker 3: Pleasure now.
Speaker 2: Ray, when you've been on podcasts with us before, we've
Speaker 2: talked about conflict of interest, and people may say there's
Speaker 2: a conflict here because the question that I'm going to
Speaker 2: ask you is why do we need an independent mortgage broker?
Speaker 2: And you are, of course an independent mortgage broker, or
Speaker 2: listeners may say while he would say that, wouldn't he?
Speaker 1: So let's just put that to one side.
Speaker 2: I know that you're going to tell us the things
Speaker 2: that you would tell us if you didn't have a
Speaker 2: conflict of interest.
Speaker 1: Am I right?
Speaker 3: Well, where there can be a conflict of interest is
Speaker 3: if you use a broker that is employed by the
Speaker 3: estate agent you're buying from. Now, what people, particularly first
Speaker 3: time biased by definition and novices of the game don't
Speaker 3: always think about is the fact that this staye agent
Speaker 3: is acting for the vendor. Therefore they don't have the
Speaker 3: same responsibility to the purchaser. They're not regulated or whether
Speaker 3: the mortgage broken himself would be or their self would be. So,
Speaker 3: if you're negotiishing the estate agent, what you don't necessarily
Speaker 3: want to do is disclosed all your cards, and you
Speaker 3: will be doing that if you actually are dealing with
Speaker 3: the mortgage broken employed by the state agent, you may
Speaker 3: stay well, my maps, one price is X, and the
Speaker 3: broken may know. Actually, it's why always find a professional advisor,
Speaker 3: and by that I mean sisters as well as brokers
Speaker 3: who are not employed by this staiztagent that you are
Speaker 3: buying a property from.
Speaker 2: But why would you not use For example, I mean,
Speaker 2: let's say you bank with a perfectly respectable high struit bank,
Speaker 2: perhaps you're a first direct or whatever, and they offer
Speaker 2: a nice range of mortgages.
Speaker 1: They already know you have some overside of your finances.
Speaker 1: Why would you not just go to your bank and
Speaker 1: get an offer from them on the basis that, yeah,
Speaker 1: mortgages are much for muchness.
Speaker 3: Well, finding a mortgage is not just about getting the
Speaker 3: best rate. The starting point, frankly, is to understand which
Speaker 3: lenders have criteria that you can meet. No point in
Speaker 3: going for a lender that's gotten cheapest, right if you're
Speaker 3: going to get rejected. A broken like John Charcot will
Speaker 3: deal with a vast number of lenders. I mean, anyone
Speaker 3: year will deal with about one hundred lenders, whist some
Speaker 3: of those lenders may only get one or two connections
Speaker 3: a year. The few points a broker will have access
Speaker 3: to all the different schemes available, and so for some
Speaker 3: clients the question will primarily be what's the best rate,
Speaker 3: because that criteria means that they can satisfy most lenders,
Speaker 3: But for lots of particularly for first style buyers and
Speaker 3: self employed people, there will be various nuances and it
Speaker 3: can make all the difference as to whether you get
Speaker 3: accepted by how your broker presents the case to the lender.
Speaker 3: So clearly you've got to be upfront, but there are
Speaker 3: different ways of presenting your case. If you actually don't
Speaker 3: present all the positives, the lender may simply look at
Speaker 3: your situation and think, oh, I'll lend to that person.
Speaker 3: So what a broke will do is go through all
Speaker 3: your details, do a fact find to get all the
Speaker 3: other information about your personal status, understand what your priorities are,
Speaker 3: be able to advise you on the clothes and columns
Speaker 3: of taking a voting rate such as a tracker rate
Speaker 3: or a fixed rate, whether it's for two years longer.
Speaker 3: Then having identified what your requirements are, and understanding what
Speaker 3: the property is because again sometimes there'll be the aspect
Speaker 3: about a property which may not be acceptable to some lenders.
Speaker 3: Now a good example is if you're buying that above
Speaker 3: commercial practices, for example, some lens will have restrictions on
Speaker 3: what we'll do with that sort of property. So what
Speaker 3: you don't want to do is waste time applying to
Speaker 3: a lender that is never going to lend to you.
Speaker 3: By that stage, particularly if there's competitions to property, you
Speaker 3: may actually have lost the property. So a good independent
Speaker 3: mortgage broker can provide a real benefit to you, not
Speaker 3: just in terms of getting the best deal, the best rate,
Speaker 3: but actually in knowing which lenders talked to, and also
Speaker 3: when there is an issue with the application, discussing it
Speaker 3: with the lender to try and resolve that. Once you've
Speaker 3: got your mortgage offer, a good broker will keeck on
Speaker 3: top of the situation in a market where interest rates
Speaker 3: are falling and where it may well be a few
Speaker 3: months from the time you get your offer to when
Speaker 3: you complete, if the infrast rate drops, the broker can
Speaker 3: actually rearrange the mortgage and get you a cheaper rate,
Speaker 3: usually the same lender. That's all part of the service
Speaker 3: that most broken offer. And then the broker should be
Speaker 3: the aging with your stage gen the state den and
Speaker 3: are the easy with this list just to make sure
Speaker 3: things goes things one's actually very smoothly. So what I
Speaker 3: would recommend you we do is first of all, talk
Speaker 3: to their friends, business, colleaged relatives, see if they can
Speaker 3: recommend a good broker. And equally, if there's a broken
Speaker 3: they recommend you you don't touch with the barge pot.
Speaker 3: If you got a recommendation that way, then you talk
Speaker 3: to a few brokers, talk to two or three seeng
Speaker 3: which because it's very very important in both the personal
Speaker 3: relationship with that broker. So you know, first impression, dur important.
Speaker 1: Ray, how did your mortgage broker get paid?
Speaker 3: The vast majority of lenders, certainly your mainstream lenders will
Speaker 3: pay the broker a commission. Knowing the trade of the
Speaker 3: properation fee, and that varies a bit, but typically on
Speaker 3: a mainstream mortgage in the region of zero point four
Speaker 3: point four to five percent, slightly more on by tonet mortgages,
Speaker 3: many brokers will charge you three. There are some brokerage
Speaker 3: who don't charge with three. Typically they want to be
Speaker 3: broken to only deal over the tudle phone. If you
Speaker 3: want a more personal service, particularly if you want face
Speaker 3: to face advice, then you will probably have to pay
Speaker 3: a fee, and nobody might pay out more money than necessary.
Speaker 3: But equally, if you compromise too much, you sometimes find
Speaker 3: you actually don't get the service.
Speaker 1: Hang on. So the pasent digging out the mortgage will
Speaker 1: pay the broker a fee, but the lender will also
Speaker 1: pay the broker a commission, so they get a broker
Speaker 1: gets paid from both sides.
Speaker 3: Yes, that's right. Basically, the commission paid by the lender
Speaker 3: will not be enough to cover all the broker's costs.
Speaker 3: So if the lender didn't pay the broker and the commission,
Speaker 3: then broke it after charge.
Speaker 2: A higher fee, and so would you expect see the
Speaker 2: commission on your mortgage rate.
Speaker 3: It makes actually no difference because if the lender was
Speaker 3: processing the application themselves they would incur the sort of
Speaker 3: cost that the broker they have to do all the tips,
Speaker 3: et ceterapt. So effectually the broker is saving the lender
Speaker 3: time by providing the information that lender needs and also
Speaker 3: of course importantly not submitting cases to for lento, which
Speaker 3: they're never going to be able to do and therefore
Speaker 3: and then does not waste time assessing cases. So lend
Speaker 3: us say a good value paying brokes to fe because
Speaker 3: actually it generates business for them, saves the money, and
Speaker 3: the mere fact that nearly nice percent of mortgages go
Speaker 3: through broken is well it demonstrates such the system works. Well.
Speaker 2: Interesting, thank you done so.
Speaker 4: Obviously, rate know there a lot of people who are
Speaker 4: coming off to our favior effectses, particularly the faviors and
Speaker 4: that's the east with quite a big jump, and want
Speaker 4: to presumably avoid that as much as possible. So what
Speaker 4: are the benefits of using broker for the remotge and
Speaker 4: say the things.
Speaker 3: Well, the principles frankly are exactly the same. When you're
Speaker 3: coming off a deal, you need to reassess your financial
Speaker 3: circumstances and decide whether you simply want to keep your
Speaker 3: mortgage at the same size and then you know what
Speaker 3: sort of deal to have. You may have had a
Speaker 3: two year deal initially, and it now might be right,
Speaker 3: perhaps because you feel for interest rates have falling somewhere
Speaker 3: close to the floor to take a five year fix
Speaker 3: or even a longer term fix vice versa. You may
Speaker 3: be coming off a five year fix, in which case
Speaker 3: you'll have been paying a very low rate, and you
Speaker 3: now need to reassess how long you want to fix for.
Speaker 3: One of the considerations is how much longer you're going
Speaker 3: to stay in the property. If you're not confident you're
Speaker 3: going to stay in the property for at least five years,
Speaker 3: probably better to go for a shorter term deal, because
Speaker 3: although most most mortgages are portable, there's no guarantee you
Speaker 3: will be able to port the mortgage, so that's a consideration.
Speaker 3: The question of whether you should go on to a
Speaker 3: tracker deal or a fixed rate is an important consideration.
Speaker 3: It may have been right when you took your mortgage
Speaker 3: out a few years ago to go for a fixed rate.
Speaker 3: Now rates are coming down and tracker rates are not
Speaker 3: much more expensive than fix rates, maybe you would prefer
Speaker 3: a tracker rate, so we've benefit them. Rates coming down
Speaker 3: have accept that. You know, a lot of people really
Speaker 3: value the fat that with a fixed rate, they know
Speaker 3: exactly what their monthly payments are, which makes it much
Speaker 3: easier to budget. Some people are got more flexibility clearly
Speaker 3: on that than others. So there's all sorts of things
Speaker 3: to consider, and a good broker is going to be
Speaker 3: able to talk through the pros and cons of the
Speaker 3: different mortgage options. Where you come to remortgage, you also
Speaker 3: need to consider whether you're remortgaging or doing the product transfer,
Speaker 3: So there tends to be quite a bit of confused
Speaker 3: and sometimes on this a product transfer means you stay
Speaker 3: with your existing lender, but you take another deal with
Speaker 3: that same lender. Remortgage is where you change lenders, and
Speaker 3: if you simply want to keep your mortgage the same size,
Speaker 3: a product runs through is a very simple process in
Speaker 3: most cases, no PaperWorks required. If you want to borrow
Speaker 3: any more money, then you will have to go through
Speaker 3: exactly the same process if you stay with your existing
Speaker 3: lenders if you remortgage, So all of these things need
Speaker 3: to be taken into consideration, and those sort of things
Speaker 3: that are broken can advise on.
Speaker 4: You mentioned a boot mortgage broad because that you have avoid.
Speaker 4: Are there any red flags that you would say would
Speaker 4: make somebody think, actually, I shouldn't be dealing with these people?
Speaker 4: Is there anything obvious? I mean, one thing I remember
Speaker 4: is that a lot of mortgage brokers during the zero
Speaker 4: interest rate period we're kind of giving people implicit advice
Speaker 4: on where interest rates we're going to go next. Anytime
Speaker 4: I heard that, I thought, that's a little bit, you know,
Speaker 4: pushing the envelope of what you should be doing. But
Speaker 4: is there anything that would make you be concerned and
Speaker 4: make you say not, you shouldn't use this broker.
Speaker 3: You can check with the Finatural Conduct Authology website that
Speaker 3: ACERS regulates it, but the vast majority are so it's
Speaker 3: unlikely that you're going to come across the worker that's
Speaker 3: not regulated. But that's a check that you know you
Speaker 3: can always do. I think, frankly, if you're not getting
Speaker 3: a recommendation, then looking at broker reviews is a good
Speaker 3: way of actually seeing you know which bokers generally get
Speaker 3: positive reviews and which bogus to avoid. Also, when you
Speaker 3: seek to make that first phone call, you may get
Speaker 3: good or bad vibes, but it is quite difficult sometimes
Speaker 3: to spot the relatively few bad guys straight away. When
Speaker 3: it comes to advice on interest rates, some brokers are
Speaker 3: all prepared to talk about that than other's. Some brokers
Speaker 3: frankly have more knowledge on that. I'm therefore more capable
Speaker 3: of talking about that, But at the end of the day,
Speaker 3: none of us knows what's going to happen. I think
Speaker 3: this is one reason why a lot of people do
Speaker 3: favor of fixed rate, because even if they end up
Speaker 3: paying a little bit more than they might have done
Speaker 3: with the track rate, they at least know what their
Speaker 3: budget is and that makes nice a lot easier. When
Speaker 3: the mortgage is probably their biggest not the payment.
Speaker 2: I think the probably covers pretty much everything, unless you
Speaker 2: think there's anything we've really miss ray No.
Speaker 3: I just say in terms of product transfers and remortgaging,
Speaker 3: I mean our Polichip John Charcoal is that we don't
Speaker 3: charge with fee on our product answer because there is
Speaker 3: less work involved and therefore that get lender is adequate
Speaker 3: or to be good charge mortgage. So the total cost
Speaker 3: of the deal is clearly important, and when people look
Speaker 3: at whether it's to go for a two or five
Speaker 3: year deal or perhaps a longer term deal, they'll sometimes
Speaker 3: simply look at the interest rate and not factor in
Speaker 3: the other promotion and cons So if you take a
Speaker 3: two year deal, for example, in two years time, you're
Speaker 3: going to have another set of arrangement fees to pay.
Speaker 3: A typical walk ise arrangement fee from a lender is
Speaker 3: one thousand pounds, for example, so it is a bit
Speaker 3: marginous whether you go for a two or five year deal.
Speaker 3: The particularly workage is quite small. Where the cost of
Speaker 3: the walk has become much more relevant as a percentage,
Speaker 3: then that there's a stronger argument to go and you
Speaker 3: fight for a five year deal. Likewise, there are many
Speaker 3: tracker deals that have no earlier repayment charges. So if
Speaker 3: you're coming to the end of a deal now and
Speaker 3: you're thinking of moving in the next couple of years,
Speaker 3: then actually a tracker deal properly makes sense, even if
Speaker 3: it's not the cheapest, because you will have no anther
Speaker 3: repayment charges and therefore complete flexibilities to when you want
Speaker 3: to sell the property. So these are the sort of
Speaker 3: consideration that you know a good broke is going to
Speaker 3: discuss for the client, which in many cases the actual
Speaker 3: borrower may not think about because you know it's not
Speaker 3: something they're doing day.
Speaker 1: To day Okay, so that's a very good reason to
Speaker 1: have a broker to talk about all the things that
Speaker 1: you might not think of if you're if you're just
Speaker 1: going for a single provider.
Speaker 2: Ray, amazing.
Speaker 1: Thank you so much.
Speaker 2: We really really appreciate you coming on and talking about
Speaker 2: all these things, and I hope that our listeners are
Speaker 2: finding them helpful. Thanks for listening to this week's Maren
Speaker 2: Talk to Your Money. If you like our show, rate.
Speaker 1: Review, and subscribe wherever you listen to podcasts.
Speaker 2: Also, if you shure to follow me and John on
Speaker 2: x or Twitter at marinas w and John Underscore Stepic.
Speaker 2: This episode was produced by Samasadi and Moses and Best
Speaker 2: thanks to Ray Bulger and questions and comments on this
Speaker 2: show and all our shows is always welcome. Our show
Speaker 2: email is Meren Money at Bloomberg dot Next.