Had a broker find me a mortgage (for limited company) and a mortgage offer was provided by lender.
During process it was revealed that there’s a no sublet clause in lease and lender would not lend on that basis.
(Freeholder refused variation of deed though did offer written permission to sublet but was not acceptable to lender nor apparently any lender?)
Broker wants fee for service still saying that he has done his job? Is this reasonable and should he be paid?
It depends on your fee agreement with the mortgage broker. It’s true It’s not his fault, but a lot of brokers are paid on completion. As it hasn’t gone to completion i would have thought a refuced fee would be due, if any.
I would agree that its not the brokers job to read and interpret the lease. Incidently, a recent court case suggests that the freeholder is not able to grant a variation to a lease that has an absolute prohibition on something.
Most of the fee received by broker comes from commission from the mortgage company.
Look at the broker’s T&Cs but if they’ve completed their side if the deal, they’ve done 95% of the work and I don’t think it would be unreasonable for them to expect to be paid your share of the fee if it doesn’t complete through no fault of theirs.
They won’t get the lender commission, so they are already taking a significant reduction in their fees.
It appears that you were trying to get a buy to let mortgage on a property you aren’t allowed to let out? I think its reasonable for a mortgage broker to assume if you ask for a btl mortgage that you already know you are allowed to let?
However, if you shared all the details of your situation and they then found a product that wasn’t suitable then they don’t deserve their fee, and you could perhaps argue that they should have asked you jf you had permission to let the property - in which case that might have prompted you to check?
Thank you, I did actually pay right away as I did feel they had done their job I was wondering what the norm is more than anything.
Thats a really interesting point what David has said about being unable to change a lease with an absolute no to something. There’s actually something good about knowing something can’t be changed as can stop alot of messing around. David, do you have any more details on the case?
Fraser….I see you point, next time it will be different I will get clarification before hand, it’s sometimes hard to not be pressured to keep things moving by agent at risk of seller pulling out, I won’t be making same mistake twice, expensive lesson although broker has offered to do next one at no extra charge.
I would suggest it is the job of the Broker to check the mortgage companies T & C’s, and to establish your circumstances in regard to the application they are submitting on your behalf. Otherwise, what are they doing for their fee?
One of the fundamental criteria to declare on a mortgage application is the properties title, how could he not establish this before searching the market for a suitable product. If he was at all professional and competent, he would know, or easily check, which companies do not lend on leasehold properties, then if he cannot find a suitable product, no fee.
Some mortgage brokers do not charge the customer, settling for the one fee from the mortgage company if you take out a product.
Check the T&C’s, as it may be unclear. Some say free, but this may just apply to initial advice.