Is it worth paying a broker fee?

Date: 02/12/2007

by Lisa Hartwell

Only three years ago, there were about three local brokers offering to assist with the arrangement of mortgages in Spain. Today, dozens have sprung up, but not all are serious professionals.

Why contact a broker?
By going through a professional broker you will automatically have access to numerous banks. Your broker should do the legwork for you and source the best and the most varied products available on the market. This can save you time and money. For instance, banks occasionally change their criteria. Although your estate agent or solicitor may have recommended a particular bank in the past, your application may be refused because of the sudden change. A professional broker will always submit your application to at least four banks to prevent this from happening. He or she can also prevent loss of your deposit: if you only apply to one bank, you could lose your deposit if you don't close on the date set in the contract.

A broker should be happy to arrange for a mortgage in principal for you. With mortgage approval, your offer will be significantly strengthened when you find the property of your dreams. This would not normally be possible if you approached a bank as an individual.

Fees? What fees?
The broker fee varies considerably. Some brokers say they have no fees, but this is probably not true. The broker is likely to have an agreement with a bank whereby the bank set-up fee is unusually high. On these accessions, the broker may receive the majority of this set-up fee as commission from the bank. This may cost you more than the average broker fee and you may not be given a choice of products either.

Beware
How can you choose a serious broker? Here are a few pointers to help…
- Be wary of a broker who doesn't charge a fee-as mentioned above, you may end up with a more expensive deal, so that the broker can get a cut.
- Exercise caution if the broker only has a mobile number and no fixed landline or verifiable company address, offering to come to you rather than receiving you in an office. We have heard of "brokers" who tell you that your application has been approved and all that is needed is the valuation. You pay the "broker" the valuation fee and never hear from him or her again. This "broker" is likely to have a pay-as-you-go phone card.
- Make sure the broker has a registered company.
- Check to see that the broker you have chosen accepts credit cards. That way you'll know he has been carefully vetted by the company that has supplied this facility.

My advice is to play safe and use a professional broker.

[ Editor's note: Lisa Hartwell works for Orange Finance, website: www.orangefinance.eu.com , and is happy to answer any questions you may have. Email her at: lisa.hartwell@orangefinance.eu.com. Orange Finance has special arrangements with financial institutions that are not available directly to the general public.]