Mortgage brokers can expect to earn £14 more per hour when working on specialist cases than on mainstream applications, according to research commissioned by Pepper Money.
The survey, which quizzed 99 intermediaries, found on average brokers working on a specialist mortgage case - from application through to completion - charged an average fee of £748 for less than 13 hours’ work. This equated to hourly earnings of £58.
For mainstream cases, Pepper’s research found brokers spent just over 10 hours working on an application and charged an average fee of £445, which equates to hourly earnings of £44.
Rob Barnard, sales director at Pepper Money, said there was a common misconception among brokers that specialist cases were more time consuming compared to mainstream business.
Mr Barnard said: "The message I want brokers to take away from this research is that it is getting quicker and easier to find a home for your cases that fail a standard credit score."
However Jay Rooney, financial adviser at One and All Financial in Manchester, disagreed with the time cited by Pepper’s survey. He said special cases took between three and four times as long to process as mainstream applications.
Mr Rooney said: "The specialist lender will quite rightly ask for a vast amount of more supporting documents and will interrogate the applicant’s bank statements more so than mainstream lenders.
"That is understandable, as they are considering lending to people that are higher risk borrowers - but it adds a great deal of time to the process."
On the other side of the equation, he said specialist lenders were also much more particular on the security or property itself, so they often declined to lend post-valuation in comparison to those on the high street.
Mr Rooney said: "This can mean a meaning a huge waste of time and money for you and your client.”
One and All Financial typically charges £295 for a mainstream case, increasing to £495 for credit impaired application.
Mr Rooney said other brokers charged up to £2,000 for specialist cases, but from an ethical perspective, his firm had decided to cap fees.
He said: "From a time perspective ratio we should really be charging £900 to £1,200. But levels like that are not something we would be comfortable with, when our fundamental task as financial advisers is to help people financially, not to hinder."
Pepper Money’s survey was carried out by independent research consultancy BDRC.
