Proc fees very low for remortgages
Are proc fees very low for remortgages?
Why do you believe this is the case?
As a result of this, would you consider shifting away from this area of the market?
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11 responses from the Newspage communityCopy all
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Proc Fees have always been a bain of contention - The amount of work now required from brokers has escalated over many years, and yet Proc fees have largely remained the same for remortgage business and new purchase business for years and years. It's been due a huge overhaul for a long time and warrants an uplift. Lenders will always argue their profit margins have tightened, over recent years, yet in some lender cases, you see record lending figures. Long overdue review required.
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Proc fees for remortgages are the same as purchases, so at a decent level for brokers. The challenge in the current market is that due to the affordability calculations being tougher, the non-assessed product transfer is more often the most suitable option for the client, but these pay a lot lower proc fee.
But doing right by the client, giving good advice and exceptional service will always pay dividends in the longer term, no doubt when the client comes back time and time again throughout the life of their mortgage. So this does not overly concern me.
But doing right by the client, giving good advice and exceptional service will always pay dividends in the longer term, no doubt when the client comes back time and time again throughout the life of their mortgage. So this does not overly concern me.
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Proc fees are only lower on product transfers, not remortgages. I have been speaking to fellow brokers a lot this week about the need for a proc fee review as they haven't changed since I have been an adviser.
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Proc Fees are the same % for the majority of lenders for purchase or remortgage loans, but they take a massive dive should a broker transact a product transfer.
Proc fees need to be reviewed as increased as costs of operating to provide advice have increased massively. I hope our trade bodies that are meant to represent brokers can get lenders around a table to introduce a minimum proc fee of, say £500 as smaller loans still take the same amount of time to administer and also provide clients with advice we want to avoid a point where businesses stop giving advice to clients who's borrowing amounts mean they are a loss leader for a business even if they charge a broker fee or not as the typical broker fee again is only a few hundred pounds.
Proc fees need to be reviewed as increased as costs of operating to provide advice have increased massively. I hope our trade bodies that are meant to represent brokers can get lenders around a table to introduce a minimum proc fee of, say £500 as smaller loans still take the same amount of time to administer and also provide clients with advice we want to avoid a point where businesses stop giving advice to clients who's borrowing amounts mean they are a loss leader for a business even if they charge a broker fee or not as the typical broker fee again is only a few hundred pounds.
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As a portfolio landlord who is remortgaging several properties at the moment, I am discovering that the proc fees for remortgages have not kept pace with the rest of the market. One needs to acknowledge the intricate role brokers play in today's mortgage market. Unlike straightforward property purchases, remortgages demand a more detailed assessment of borrowers' financial situations, credit histories, and market dynamics.
Our broker navigates rapid product changes, fluctuating interest rates, and market uncertainties for us on each application. Sensible proc fees for remortgages not only recognize that enhanced advisory effort, but also signal a commitment to valuing good brokers' contributions. In an era of heightened consumer protection measures and market intricacies, fair compensation for brokers isn't just a matter of equity; it's a testament to the pivotal role they play in most borrowers' financial well-being.
Our broker navigates rapid product changes, fluctuating interest rates, and market uncertainties for us on each application. Sensible proc fees for remortgages not only recognize that enhanced advisory effort, but also signal a commitment to valuing good brokers' contributions. In an era of heightened consumer protection measures and market intricacies, fair compensation for brokers isn't just a matter of equity; it's a testament to the pivotal role they play in most borrowers' financial well-being.
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No. Proc fee rates for remortgages are the same as purchases. It is a % of the loan amount and does not discriminate between the type of transaction.
There are differences between residential or buy-to-let transactions and differences again for product switches with a current lender administered by the broker.
But there is no difference in whether it's a purchase or remortgage transaction. Both are deemed 'new business' by the lender and paid equally at the corresponding residential or buy-to-let rate.
There are differences between residential or buy-to-let transactions and differences again for product switches with a current lender administered by the broker.
But there is no difference in whether it's a purchase or remortgage transaction. Both are deemed 'new business' by the lender and paid equally at the corresponding residential or buy-to-let rate.
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The proc fee for a remortgage with almost all lenders is the same as a purchase case, as it is new business to them. However, product transfer proc fees are lower with many lenders than they pay for new business, at roughly half the new business fee. My personal view is that this is not a deal breaker, yes the upfront work is the same whether the advice ends up being a remortgage or a product transfer, but the work involved in making the application and chasing this through to completion is far less, so for the time spent the hourly rate probably works out to be similar; and when all is said and done what's right for the client should be the driving factor in the process.
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I think mortgage proc fees need looking at across the board really. Particularly on smaller mortgages which require just as much work, the lenders are getting an absolute steal getting a broker to do all the advertising, advice and client work if they're paying for anything under a £500 proc fee.
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Why aren’t proc fees equal for product transfers and remortgages? It’s a mystery to me. Having said that, product transfers are generally lower than remortgages, but that doesn’t always mean it’s going to work for an individual. As brokers, we still need to do the same level of work to ensure everything the options are clearly understood, and that the client finds the right product for them.
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Proc fees arent low for remortgages, they tend to be lower on product transfers as most lenders only pay half of the usual proc fee.
Most brokers also don't charge a fee for a product transfer but do for a remortgage so there is less income being generated when most clients are having a product switch rather than remortgage.
I think having an ongoing relationship with existing clients is imperative and I love dealing with the same clients that trust you. So I would never move away from offering remortgages and product switches as its always great to catch up with my existing clients.
Most brokers also don't charge a fee for a product transfer but do for a remortgage so there is less income being generated when most clients are having a product switch rather than remortgage.
I think having an ongoing relationship with existing clients is imperative and I love dealing with the same clients that trust you. So I would never move away from offering remortgages and product switches as its always great to catch up with my existing clients.
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Proc fees are low across the board, there should be a review every year in line with all the other fee earners. Even PAYE get a yearly review! Bad proc fees can only mean the smaller properties get de-prioritised. Even though everyone should be shown the same level of service, I can imagine its not always the case.