A report has accused mortgage brokers of ‘hogging’ lenders’ commission payments considering the time it takes to complete a remortgage.
Broker CashbackRemortgages.co.uk said that thanks to advanced mortgage systems and tech it takes far less time to scan the market and collate the best offers.
It claimed that brokers therefore earn more than barristers per hour because they can deal with the remortgage in a couple of hours.
The report said it should be the norm for brokers to hand half of the procuration fee back to the consumer.
Suchit Sethi, founder, CashbackRemortgages.co.uk, said: “As much as it will make brokers’ blood boil, arranging remortgages is money for old rope.
“The public are led to believe they’re receiving sage counsel and complex financial advice but when it comes to earning their money from remortgages, brokers are often reading from a script.
“Technology has revolutionised the industry to the point that remortgaging is little more than comparing a few variables among a small handful of products picked in a nanosecond by a computer.
“Complex financial advice it most certainly isn’t and so it’s high time brokers came clean and stopped hogging lenders’ commissions.”
He added: “Some brokers are earning as much per hour as a top London barrister for doing the absolute bare minimum.
“Such is the level of deception out there that many homeowners are even charged for the advice they are getting on top of the commission paid by the lender.”
He made the barrister claim based on remortgaging taking two hours to complete.
Meanwhile the firm said the procuration fee is normally worth 0.35% of the value of the loan. This would mean a broker pockets £350 for arranging a £100,000 mortgage, £1,050 for a £300,000 mortgage or £1,750 for a £500,000 mortgage.
At the upper end of the market, the figures become even more pronounced, with a £1m mortgage netting brokers £3,500.
Some brokers also charge an ‘advice’ fee on top of that.
Bournemouth-based broker Rob Ashley-Roche, principal of Rest Assured Mortgages, hit back at the report.
He said: “It certainly takes longer than two hours to arrange a remortgage – that’s absolute bo***cks.
“The paperwork alone takes two hours. Then you’ve got to get the paperwork in and make sure it’s okay. After that you’ve got to make sure it goes through which is hours chasing lenders up.
“I struggle to do more than one case a day.”
He added: “The report also seems to forget that as a business you do not make 100% profit on the proc fee.
“There are some lucky brokers in London who are making lots of money but their overheads will be very high.
“If you take your average good mortgage broker that may have a turnover of £50-60,000 I’d be surprised if the net profit was more than £20,000.
“So stick that in your pipe and smoke it.”