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MORTGAGE INTERMEDIARIES Mortgage intermediaries or brokers exist to give advice to borrowers owing to the enormous choice of products and types of mortgage available. Owing to this wide choice of products, intermediaries can satisfy a great number of consumer needs, however complex Many lenders now offer introduction fees to intermediaries which help to off-set their costs. In addition, commission is earned on any repayment vehicle, or life assurance contract sold Estate agents often act as mortgage intermediaries, as well as arranging sales and purchases of property. Since they receive a fee for the sale or purchase of the property, they are less likely to charge a fee for arranging the mortgage Some mortgage brokers may be independent when placing the mortgage loan but tied to one provider for the accompanying repayment vehicle (Endowment, ISA, Personal Pension Plan or other product) The majority of mortgage brokers subscribe to the The Mortgage Code Register of Intermediaries (MCRI). Amongst other things, this commits them to offering advice and a written recommendation, only after establishing the customer’s needs and taking into account current market conditions. Alternatively, they may offer information only, either on the different types of mortgage products offered or on a single mortgage product. It should be noted that mortgage intermediaries are not regulated under the Financial Services Act 1986 in respect of their mortgage lending advisory activities; this is because mortgages are not classed as investments and are not regulated by the Act Solicitors may also undertake mortgage broking as well as conveyancing and other legal services. Again, if they are receiving a fee for conveyancing, they are less likely to charge for arranging the mortgage Most of the leading building firms now offer mortgage finance in association with local building societies or banks, as part of a package to sell new homes. Since they can offer ‘bulk’ business to lenders, they can often offer attractive terms (e.g. 100% mortgages). In addition, the building firm may subsidise mortgage rates for a time to attract buyers, as well as offering cash rebates, carpets, curtains and so on in place of giving a discount on the purchase price |