Brokers – they all do the same job don’t they?

I was recently approached by a business owner wanting to purchase trading premises for £200,000 and wanted me to look at options for a commercial mortgage with the highest Loan to Value possible.

On reviewing the information that I gathered from the client, I could see that the business was strong and would fit with some of the best lenders all day long. I went ahead and obtained indicative terms from the best lenders in the market for this client and subsequently issued my terms of business to him to proceed.

The client then advised that he wanted to move quickly and already had a “Decision in Principle” from another broker. Feeling under pressure from the agent, he felt compelled to push ahead with that other offer but in any case, sent me the information from the broker.

I was amazed to see the offer from what I would consider a 3rd tier lender given that it was such a strong business. Admittedly, due to the loan amount, it would not fit with several specialist lenders due to their “minimum” loan amount criteria. However, I could think of a number that would have been able to assist if required.

Thankfully following a conversation with the client, and me going through the various options I had for him, he was happy to proceed with a full application to get full credit backed terms from one of my (far better) options.

Here’s the terms that I obtained versus those from the other broker;

75% LTV v’s 70% LTV*

Arrangement Fee of 0.75% v’s 2%

Rate of 3.2% over base (7.2% all in) v’s 10%

No Early repayment charges v’s pretty hefty ones

Broker fee of 1% v’s 2%

*What also hadn’t been made clear to the client was that this lender works on a 180 day valuation, therefore a true 70% LTV is not given. The other broker would/should have known this. The effect of this is that the client would likely have ended up with an offer of nearer 60% of the open market value of the property.

It just goes to show how important it is to deal with a broker who has access to the whole of market and is focused on working in the best interests of the client. Brokers are NOT all the same.

Leave a comment

Your email address will not be published. Required fields are marked *