Sindo cautions on Mortgage Brokers

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Brokering a deal can be risky business

Apparently they may not be working for your best interests.

THERE are about 1,500 mortgage brokers in Ireland. However, one in eight of these do business with no more than two lenders, according to an analysis of the Financial Regulator’s broker register by the Sunday Independent. If your broker is one of these, not only could you lose out on some of the best deals on the market – you could also end up with a more expensive mortgage than if you went elsewhere.

A mortgage broker must have an agency with a lender to be able to offer that lender’s mortgages to you. The more agencies a broker has, the more lenders that broker can act for. If your broker has agencies with all of the main lenders, he can offer you the full choice of the market. But if that broker has only one or two agencies, you have little choice, if any.

“What’s the point in going to a broker if the advice you are getting is only for one or two lenders?,” said Michael Dowling, a spokesman for mortgage brokers, the Independent Mortgage Advisers’ Federation (IMAF). “A broker should have agencies with five lenders at the very least. There are about 12 mainstream lenders on the market.”

According to the register, some of the mortgage brokers who do business with only one lender include North East Property Services in Dundalk, Co Louth; Alan Merriman & Company in Swords, Co Dublin; and Cill Dara Financial Services in Kildare Town. Some of the brokers with agencies for only two lenders include SSA Mortgages in Connemara, Co Galway; Europlan Insurances in Dublin 2 and Corboy Financial Services in Gorey, Co Wexford.

The loans arranged by some of these brokers are more expensive than others available on the market. North East Property Services only offers mortgages from the sub-prime lender, Start Mortgages. Sub-prime mortgages are generally offered to people with poor credit histories or self-employed individuals who have difficulty proving their income. The interest rate on sub-prime mortgages can be as much as twice as expensive as the interest rates charged by mainstream lenders. Cill Dara Financial Services only sells mortgages on behalf of IIB Homeloans – one of the more expensive mainstream lenders.

To earn 1 per cent commission from First Active, a broker must sell more than €20m worth of the lender’s mortgages a year. With Permanent TSB, a broker must sell more than €6m of its mortgages a year to earn 1 per cent commission. With EBS Building Society and Ulster Bank, the threshold is €5m. With AIB, it’s €3m. At €1.3m, the lender with the smallest threshold is IIB Homeloans. This probably explains why so many of the brokers with only one agency do business with IIB.

independent.ie/business/iris … 66507.html