Do Mortgage Brokers Charge Fees?

How Do Mortgage Brokers Get Paid?

Mortgage brokers earn money in two main ways: through commission paid by the lender when a mortgage completes, and through fees charged directly to you, the borrower. Some brokers use just one of these methods, while others use a combination of both.

Lender commission, often called a procuration fee, is typically around 0.3% to 0.4% of the mortgage value. On a £250,000 mortgage, that's roughly £750 to £1,000. This commission is paid by the lender, not by you, and is built into the product pricing, so it doesn't add to your costs directly.

All brokers who receive commission must disclose this to you. It's stated in the key facts illustration and the broker should tell you about it during the advice process. Transparency about how they're paid is a regulatory requirement.

How Much Do Fee-Charging Brokers Cost?

Brokers who charge a fee typically charge between £300 and £1,000, though some charge more for complex cases. The fee may be a fixed amount or a percentage of the mortgage value, commonly around 0.3% to 1%.

Some fee-charging brokers collect a booking fee upfront (often around £100 to £300) with the balance payable on completion. Others don't charge anything until the mortgage completes. Make sure you understand the fee structure and when payments are due before instructing a broker.

Fee-charging brokers may or may not also receive commission from the lender. If they receive both a fee from you and commission from the lender, they should disclose this clearly. Some brokers offset their fee against any commission received, effectively giving you a discount if the commission exceeds their standard fee.

Fee-Free Brokers: How Do They Work?

Fee-free brokers earn their income entirely from the commission paid by lenders. From your perspective, you receive mortgage advice and support throughout the application process without paying anything directly to the broker.

The quality of advice from a fee-free broker should be no different from that of a fee-charging broker. All mortgage advisers are regulated by the Financial Conduct Authority (FCA) and must recommend products that are suitable for your needs, regardless of how they're paid.

One potential concern sometimes raised about fee-free brokers is whether they might be influenced by commission levels when recommending products. However, FCA regulations require brokers to act in your best interest, and recommending a product based on commission rather than suitability would be a serious regulatory breach. Reputable fee-free brokers recommend the best deal for your circumstances.

Which Type of Broker Should You Choose?

For most straightforward remortgages, a fee-free broker offers excellent value. You receive professional advice, access to a wide range of products, and support through the application process without paying anything out of pocket.

Fee-charging brokers can be worth considering for more complex cases, such as adverse credit, self-employment, unusual property types or very large mortgages. These specialists often have access to niche lenders and the expertise to handle challenging applications that might be beyond the scope of a generalist fee-free service.

Whichever type you choose, make sure the broker is whole-of-market, meaning they can access deals from a wide range of lenders rather than being tied to a limited panel. This ensures they can find the best deal available for your situation, not just the best deal from a small selection of lenders.