Why some brokers are charging upfront fees

Customers looking for a low rate loan do not understand that their broker has placed money upfront on their behalf.  For example, some broker are paying upfront fees for  BSQ (Building Society Questionnaire) at £98, Valuations from £85 up to £250 and first charge consent forms at £100. This means that your broker has paid on average £280 before your application is sent to the lender. If the application fails your broker will incur this deficit.
Brokers are beginning to ask for fees upfront and in many cases, clients are being told that they will not be able to go ahead until the upfront fee is paid. There are a number of companies that ask for the fees upfront and never perform the checks. This means that you have lost the fee and your broker has made a little profit. In reality these companies are soon discovers and the OFT are sent to hammer them with their batons.
Sometimes your broker will ask you to pay the fee for legitimate reasons. For example brokers will conduct an online (free) valuation on properties in your area. If you are claiming that your property is considerably more than the areas average, you broker may become sceptic about the true valuation price and ask you to pay the valuation fees upfront. In this situation the broker does not believe that the property is worth what you are stating. If they do a valuation and it come in below then you will not get the loan and your broker will be out of pocket. Under these conditions it is obvious to see that your broker is protecting his/her company. You need to use your common sense at this time.

High Valuations

If you think your property is worth more than the area average you need to gain some evidence before completing the application.

• Are you the only property to have double glazing?
• Are you the only property to have an extension, patio, larger garden?

Explain these points to your broker and they might agree to pay for the valuation. Remember that using tools like Google Earth your broker can check these details.
There are also other types of fees that are placed on a loan application, these consist of Lender fees and Broker fees. Lender fees are charges that the lender places on top of the loan. For example if you wish to get a loan for £15,000 with Nemo then a £495 lender fee will be added to your loan amount.  Blemain have a number of items that make up their lender fee. This includes Title Insurance Fees and Solicitors Fees.  Note that the total for these fees change based on your loan amount.

www.oft.gov.uk/advice_and_resources/resource_base/legal/cca/brokerage-fees
www.oft.gov.uk/advice_and_resources/resource_base/legal/cca/second-charge-lending