If you’ve ever bought a property through an estate agent or you’re looking for a home now, the chances are that you will have been coaxed into speaking to an estate agency mortgage broker.
Now, in certain parts of London and the South East, a ‘new trick’ is emerging, according to The Guardian. Many estate agents are now refusing to put forward an offer for a property or, in some cases, even let you view a house unless you have been ‘vetted’ by their in-house mortgage broker.
Is this practice fair, and does it ensure that you get the best advice when looking for a high value mortgage? We investigate.
Agencies forcing buyers to speak to their in-house advisor before a viewing is arranged
The Guardian reports that many agents in locations where the property market is strong are refusing to put forward offers from potential buyers unless they have first spoken to estate agency mortgage brokers. The newspaper reports that ‘some agents are even going as far as inserting a clause into the vendors’ selling contract to stipulate that they agree to all potential purchasers of their property being vetted by the in-house mortgage adviser.’
Islay Robinson, CEO of London mortgage broker Enness Private Clients doesn’t believe the process helps high net worth mortgage clients. He says: “While I have no issue with in-house mortgage brokers per se, making a financial ‘vetting’ by an advisor a condition of viewing a property seems completely ridiculous.
“Buyers are being forced into using an agency based mortgage advisor otherwise they won’t get a look-in at their chosen property. This means they can’t use their own broker or someone they trust from another firm which seems totally unfair.”
The Guardian reports a leading London mortgage advisor who argues that you’re not even guaranteed the best deal when you speak to an estate agent based advisor. He says that ‘many estate agent-based advisers work off a limited panel, rather than the whole of the mortgage market.’
Estate agents have been increasingly keen for buyers to arrange their mortgage in-house. One of the main reasons is because it is lucrative business. Countrywide made nearly as much money in 2012 from the £7 billion of mortgages that it arranged than it did from selling homes.
But, does this lead to a conflict of interest? Keep reading to learn more.
Are estate agency mortgage brokers really working?
“One of the biggest problems I have with in-house brokers is that there is invariably a conflict of interest,” adds Islay Robinson, the large mortgage specialist from Enness Private Clients. “An estate agent works behalf of the vendor with the goal of selling their property for the highest price. However, estate agency mortgage brokers are representing the interests of the buyer, trying to secure the best deal possible.
“There has to be a clear separation of interests in order to make sure that the buyer’s confidential financial information is passed between broker and estate agent. If there isn’t, then there is clearly a huge trust issue for a high value mortgage client whose offer for a property may be undermined by a broker hinting to the agent that they have more funds available.”
Feel free to contact us for more information regarding the difference between brokers when it comes to your mortgage. Alternatively, you can take a look at our up-to-date mortgage guide library for the bigger picture.