Something I see debated a lot online is whether we should pay a mortgage broker and if we should, how much we should pay. I often see on Facebook groups and forums people posting saying words to the effect of, ‘can anyone recommend a good mortgage broker who doesn’t charge a fee?’.
I must admit that when I see that I pull my hair out because why would you not want to pay your mortgage broker a fee. I know that cash-flow is important and that we want to make a profit, but being able to raise finance is one of the most important skills that an investor can have. Or one of the most important skills that an investor can out source, in this instance to a mortgage broker.
If I am going to instruct a mortgage broker to act on my behalf, I want the very best mortgage broker. I want to know that I can get the finance and I want a mortgage broker who can not only get the finance but one who understands what I am trying to do, one who understands my strategy and one who can help me to plan ahead into the future.
It is not just a case of I have a property I want to finance it, but it is about I want to build a portfolio over the next 5 years and I want a mortgage broker who can help me by being able to finance the creation of that portfolio over the next 5 years because they’ll know exactly which lenders to take me to, they’ll know which lenders to take me to in the right order, they’ll know exactly the types of things they need to be saying to the underwriters at the banks if a situation is not quite right or it doesn’t tick all the boxes but it is a great property for me then they know what to say to the underwriters. All of this is so important.
So, when I see people saying how can I find a good mortgage broker particularly one who doesn’t charge fees I think they are missing the point. It’s not about whether you pay your mortgage broker a fee or not. It’s about whether the mortgage broker gets you the finance.
I know this sounds very flippant but one thing which I will always say to someone if they even start intermating that the fee is the most important thing is when you’ve got a portfolio of 50 properties you are not going to be lying in bed at night worrying about the fees that you have paid your broker. You are going to be glad that you’ve got your portfolio of 50 properties and that they are cash flowing. You’ve got to keep the big picture in mind, you’ve got to keep perspective on this. It’s not about saving £200.
A related point sometimes I’ll see on the forums a comment like ‘a broker has said that they want a £350 fee, is that reasonable?’. We don’t know, you haven’t told us what the broker is going to do for you. If they are going to raise £5 million for you over the next 2 years it sounds like a bargain to me. We just don’t know.
This is what I am trying to say, you’ve got to have the bigger picture in mind, it’s got to be in the perspective of what you are trying to achieve. Who knows whether £350 is a good fee or not, to me that sounds cheap.
Big warning here, if you really want to have free advice it is not going to be worth anything. If you want to get a good mortgage broker and you are thinking I don’t want to pay more than £350 you are not going to get a good mortgage broker.
Again, rather flippantly, I always tell everyone that I pay my mortgage broker in gold, wheelbarrows of gold. I am being flippant because I don’t really, but what I’m saying is that I don’t care how much they charge. If my mortgage broker produces the finance that I need and it helps me to build my portfolio and it helps me to fulfil my strategies, I will just pay them. Send me the bill and I will settle it immediately. I don’t even need to know what the bills going to be. I am not going to haggle and negotiate with a mortgage broker who I know is good.
Which brings me back to my last point, and I know that I keep banging on about this, and forgive me for this because I have offered this in videos and my articles and my newsletter and so forth, but if you want to be introduced to a good mortgage broker then of course I will introduce you to my mortgage broker.
I don’t want a lot of tyre kickers and time wasters clogging up his system so what I would ask you respectably is this; send me a brief 5 or so bullet points of what your experience is in property, what you are trying to achieve and why you particularly want to talk to my mortgage broker, at that point in time and I will pass you on.
Unless you’re a tyre kicker in which case I might respectfully say let’s just wait a minute until we’ve either done this, this or this, or found a property or whatever it happens to be.
But yes, if you want to talk to a good mortgage broker, I’m very happy to recommend my mortgage broker and I will put you in touch. All you need to do is email me at email@example.com.
Peter Jones B.Sc FRICS
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