Low-cost ‘large mortgage’ service launched

A large mortgage advice service has been launched to counter high arrangement fees for more complex mortgages, Chris Morgan, lead financial adviser at Unusual Risks, has announced.

Commenting on the launch of Unusual Mortgages, he said: “The Unusual Mortgage service offers highly experienced and expert advice in return for highly competitive fixed arrangement fees.”

He said the firm had developed a business model and advice process offering independent mortgage advice at highly competitive fixed broker fees.

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The Devon-based adviser gave an example of a client who was charged a high fixed broker fee by a broker for a buy-to-let mortgage, and who was quoted an arrangement fee of 1.35 per cent. According to Mr Morgan, he was able to offer a counter deal that equated to a £2,000 saving in upfront arrangement fees.

Mr Morgan claimed he was also able to save the same client thousands of pounds of interest on a development mortgage loan after he was able to negotiate a lower interest rate on a £300,000 mortgage. The saving totalled £14,000 in interest over the 12-month term.

He added: “On a number of occasions we have met clients who have been quoted broker arrangement fees of between 1 per cent and 1.5 per cent of the mortgage, which can equate to literally thousands of pounds of extra fees.”

The service will aim to beat these arrangement fees by using a fixed-fee strategy not connected to the size of the mortgage. Mr Morgan already runs the Unusual Risks insurance brokerage business, which focuses on mortgages and insurance for clients with pre-existing medical conditions, such as HIV and hepatitis C.

In October, the company launched a campaign to secure income protection and critical illness cover for people living with HIV.

Adviser View

Alex Reynolds, financial adviser at London-based Advies Private Clients, said: “Brokers need a standard fee structure, but then there is always negotiation. I would like to see how their fees pan out and how they will compete in the market. If it drives prices down and competition up, and gets more people into the large lending space it is a good thing.”