Mortgage Broker/Adviser Fees (UK Breakdown)

Working with a mortgage broker can help you get in-depth advice and expertise in the housing market to ensure you get the best mortgage deal available to suit your circumstances.

There are many different mortgage brokers in the UK, and they don’t all offer the same level of service.

Here’s a comprehensive review of mortgage broker fees across the housing market in the UK.

How Much Do Mortgage Brokers Charge?

Each mortgage broker has a different pricing structure, and the fees can vary significantly.

Most brokers charge around £500, while others don’t charge any fees to mortgage applicants.

Mortgage broker fees usually vary because each case is different. Some may require more work and time than others, while others are straightforward.

A mortgage broker should always tell you their fees to ensure you make an informed decision in advance.

Different pricing models to expect include:

Fee-Free Brokers

No fee mortgage brokers exist, and they can be a cost-effective solution.

Such brokers make their money by charging a commission to the mortgage lenders instead.

You’ll get their expert services without any cost, and this can be a huge save as you deal with other costs associated with purchasing a property.

Hourly Rate Brokers

Some mortgage brokers can charge by the hour, and if your application has any complications that need more time, you’ll find such fees quickly escalating.

Ensure you get estimates of how many hours a broker will charge you.

Fixed Charge Brokers

Some brokers charge a fixed fee, and it’s usually a more transparent approach.

It typically ranges from £300 to £600, with the majority charging £500 if no further costs are included.

Such fees can be charged upfront or after completing the mortgage transaction.

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Percentage

In such models, the mortgage broker charges a percentage of the mortgage you’re taking out.

It’s usually 0.3% to 1% of the loan amount, and you can end up paying more than the average mortgage broker fee for higher-value properties.

Combination

Some mortgage brokers can use a combination of these pricing models. They can get a commission from the lender and still charge you an hourly rate.

Brokers who don’t work solely on commission aim to mitigate the risk of a client changing their mind, resulting in wasting their time and effort.

Why Do Mortgage Brokers Charge a Fee?

Mortgage brokers charge a fee for a variety of their services. These can include:

Find you a cost-effective mortgage by calculating your affordability.
Finding you the best deals by comparing the whole of the market.
Filling out and managing your mortgage paperwork.
Negotiating your mortgage terms and conditions with a suitable lender.
Guiding you through and overseeing the mortgage application and meeting all deadlines.
Comparing the available range of mortgage products to find one better suited to your needs.

Which is Best Between a Fee-free and Paid Broker?

The best choice will depend on your circumstances, the fee charged, and whether the broker can reduce any lending fees. While not paying any broker fees sounds great, you may find some very unethical.

Some may advertise as fee-free, but you may find that it only relates to the initial consultation.

Others may actively recommend unsuitable mortgages with lenders because they want to earn a commission.

Fee-free brokers are more suited to borrowers with less complex needs like an easy-to-prove income, a perfect credit score, and can put down a higher deposit.

Those with more complex needs like bad credit or low deposit may benefit from a paid, experienced mortgage broker who specialises in bad credit mortgages.

Working with a competent, experienced and trustworthy mortgage broker can ensure you get your dream mortgage, whether you pay or not.

You’ll benefit from their unparalleled expertise, and they can give you access to more competitive products.

How Much Commission Do Mortgage Brokers Get?

Almost all mortgages involve paying a commission to the broker, and the commission they get will vary among lenders.

The commission is usually a percentage of the mortgage, around 0.35% of the full mortgage amount after completion.

For example, the mortgage broker would receive £350 for a £100,000 mortgage or £700 for a £200,000 mortgage. Larger loans attract higher commissions.

Regulators have often scrutinised mortgage commissions with concerns that brokers may recommend products that only benefit themselves and don’t offer the best deal for the client.

You need to ensure the mortgage broker chooses the best deal for you and not just themselves.

Ensure you only work with mortgage brokers regulated by the Financial Conduct Authority (FCA) or is an agent of a regulated firm.

When Do You Pay Mortgage Broker Fees?

You may find mortgage brokers who charge their fees upfront, while others request to be paid after the mortgage application has been successfully approved.

You’ll find that the lender pays most mortgage broker fees, and they’ll not cost you a thing.

However, it’s a good idea always to be clear on when the mortgage broker should be paid and whether or not you’re the one making the payment.

Can I Negotiate Mortgage Broker Fees?

Yes! Some mortgage fees can be negotiable. Even in circumstances where the broker fees are fixed, you’ll find various opportunities to save money. Brokers pride themselves in negotiation skills, so it’s encouraged and can be a way to test whether they’re worth their salt.

The broker’s negotiation skills will enable them to find you the best deals and keep the mortgage costs down.

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Are Mortgage Broker Fees Refundable?

Some brokers have refund policies in their mortgage broker agreements, while others do not.

You have every right to make a complaint if you’ve already paid a fee and later feel that you were mis-sold a product or recommended to a lender that isn’t suitable for you.

When possible, it’s a good idea to raise any issues before making any payments if you’re dissatisfied with the services provided by a mortgage broker. Before you sign any agreement, it’s wise to check if there’s a refund policy.

You can ask them to include one if it’s not stated within the contract or ask for written confirmation that you’ll not pay any fee if the mortgage deal falls through.

Are There Any Other Fees?

In addition to other expenses like removal costs, stamp duty, and financial advisor mortgage fees, you may find brokers who charge borrowers extra fees.

While the amounts can be different, they can include some, all or none of the following:

Underwriting fees.
Broker finder fees.
Broker application fees.
Cancellation fees.

Some of these fees can be for the mortgage broker themselves, and they’ll not reflect on your final bill.

Expert mortgage advisors can provide valuable advice on which payments are worth paying and how to avoid such extra fees. They can even connect you to reputable brokers who don’t charge fees.

Are Second Mortgages and Banks Cheaper?

No. It will not make any difference whether the mortgage product you’re applying for is a first or second mortgage. Mortgage broker fees will remain the same, usually 0.3% to 1% of the mortgage amount.

While you may think going straight to traditional lenders as banks will give you the best deal, it isn’t always the case.

You’ll not have access to all the deals available in the entire market. The chances that the bank has the best available pick are very low because there are thousands of mortgages and hundreds of lenders to compare.

Mortgage Broker Fees Final Thoughts

It’s important to find a mortgage broker you can trust, and that’s where expert advice is invaluable.

Some of the best brokers will agree for you to pay after you’ve scrutinised the mortgage they’re recommending and not before. It will allow you to determine whether you’re making any savings to justify the fee.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

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