- 16
- Nov
The majority of people are keen to know the earnings of other people, and this can be stated as virtually a fact of life.
The same is the case when talking about remortgage, mortgage and secured loan brokers. It appears to some as a pleasant occupation, but some wonder if it financially worth pursuing.
Pre 2007, a secured loan, remortgage and mortgage broker had a decent standard of living, generally speaking, as the commission paid to them by the lenders was fairly good.
There were a number of secured loan lenders who offered numerous secured loan plans for all people and all circumstances. These secured loan lenders were in stiff competition with each other and as such they relied heavily on brokers to introduce as much secured loan business to them as possible.
It was a case of mutual inter dependence between the lender and the broker.
Many of these secured loan lenders are no longer in business, and frequently this is due to their inability to obtain funds.
Future Mortgages was one of the first to shut its doors mainly due to the fact that it was part of an American group who suffered dramatic losses in America through its involvement in the sub prime mortgage market.
The underwriting of some of the secured loan lenders was so lax, and it was these practices in the banking industry in general that contributed to the credit crunch.
The secured loan industry so very vibrant until the start of the credit crunch has now become a shadow of its formal self, and the commission paid by the secured loan lenders to their intermediaries is also a shadow of its former sense.
The commission has been reduced to such an extent that it is difficult to make a decent enough living. A secured loan broker in general now only receives commission of 1% of the secured loan value which goes no where towards covering costs let alone leaving a profit.
There are a number of processing costs to pay such as to pay the mortgage lender for answering a questionnaire regarding the conduct of the prospective secured loan borrowers mortgage account. A surveyor also has to be paid for carrying out a valuation on the property being offered as security,
As the commission does not even pay for the costs of processing the secured loan application, the only way that a secured loan broker can produce a profit now is by charging the customer a fee for arranging the secured loan.
Mortgage lenders pay the same now as before the recession to mortgage brokers who introduce business to them, and in general this is about a third of one percent of the remortgage or mortgage value. If it is a small mortgage or remortgage this again is not sufficient to make a living and normally the mortgage broker will obtain a small fee from the client. This fee is worth paying for his knowledge of the mortgage industry.
Learn more about remortgages Stop by Champion Finance’s site where you can find all the information you need about remortgages for your needs.
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