How Much Do Mortgage Advisors Charge?
, by Matt Stevens
When seeking a mortgage, it's wise to minimise costs wherever possible, yet this can sometimes cause people to forgo hiring a mortgage advisor. However, this is precisely where the expertise of a mortgage broker is most apparent. Their role involves scrutinising various deals from different lenders to secure the most financially beneficial option on the market for you, all while saving you time and alleviating stress.
Having said this, determining the appropriate cost for mortgage advice can be challenging. For this reason, we’ve put together this guide to help you get an idea of the costs associated with mortgage advice in the UK. We’ll cover:
Do mortgage brokers charge a fee?
In the majority of instances, a mortgage broker will levy a fee for their services. These services encompass an extensive scope, ranging from scouring the entire market to unearth the most favourable deals, assessing your affordability to secure a cost-effective mortgage, negotiating terms and conditions, handling and completing paperwork, overseeing your mortgage application, and ensuring that all deadlines are diligently met. Additionally, they explore a spectrum of mortgage products to identify those better aligned with your specific needs.
What is the average cost of a mortgage advisor?
The payment structure for mortgage brokers varies based on individual practices. Some fee-charging brokers may request upfront payments directly from customers before commencing their search for lenders, with fees typically ranging between £300 and £600, although exceptions exist.
Alternatively, there are brokers who adopt a flat fee model with a fixed rate. This fee is applicable whenever mortgage advice or services are rendered and typically falls within the range of 0.3% to 1% of your total mortgage value. It's important to note that these fees can accumulate, underscoring the importance of clarity regarding the charges before engaging with a mortgage broker.
What if my situation is complex?
Certain applicants might encounter challenges in finding a lender due to unique circumstances, leading some brokers to charge extra for the additional time required to secure a fitting mortgage. In instances where a borrower has not fully disclosed their financial situation or has inadvertently omitted vital information that could impact the mortgage approval process, delays may occur. Such situations often necessitate the mortgage broker completing extra paperwork or conducting further research.
To preempt any unforeseen charges, it is advisable to carefully review the mortgage broker fee disclosure form before signing any agreements.
What are the different types of mortgage advisors?
On one hand, tied or 'multi-tied' mortgage advisors are affiliated with a specific lender or a group of lenders. They provide guidance exclusively on mortgage deals offered by their affiliated lender(s), and thereby lack access to information about offerings from other lenders, including major banks and building societies.While these advisors often work without charging a fee, being compensated by the lender they represent, this approach may result in missing out on information about potentially more suitable mortgage deals.
On the other hand, independent mortgage advisors, also known as 'whole-of-market mortgage brokers,' operate as unbiased financial experts specialising in mortgages. In essence, this means that they possess the ability to advise and secure mortgage deals from the entire market, providing access to options that might not be available through other channels. Some banks even extend exclusive rates to brokers that aren't offered to their own customers. Further still, independent mortgage advisors can act as advocates, negotiating with lenders on your behalf.
How much commission do mortgage brokers receive?
Independent mortgage advisors typically receive a commission from the lender you choose as your mortgage provider, commonly referred to as a procuration fee, amounting to approximately 0.35% of the mortgage value.
In some cases, brokers working on commission may also impose an additional fee. This can either take the form of an upfront flat fee to initiate their search, or instead a refundable fee which is reimbursed if they fail to secure a mortgage for you. It is crucial for any mortgage broker to provide you with a written quote before you agree to their fee or rate. Moreover, if a fee is applicable, clarity should be provided on whether it is required upfront or upon the completion of the mortgage process.
Other mortgage advisor fees
Some advisors impose additional fees, the amounts of which can vary among brokers. These encompass different elements such as mortgage broker finder fees, underwriting fees, mortgage broker application fees, and cancellation fees.
Regarding this, it should be said that certain fees will not contribute to your final bill and are solely for the broker's compensation. It's likewise important to note that every mortgage broker in the UK must be regulated by the FCA or act as an agent of a regulated firm, implying the payment of a fee for regulatory compliance.
What is a fee-free mortgage broker?
‘No fee' mortgage brokers offer a cost-effective alternative, with many finding this option appealing. Rather than charging an upfront fee, these brokers receive a commission payment from your lender upon the successful completion of your mortgage.
However, it's important to note that while some brokers might advertise fee-free advice, this could be limited to their initial consultation. To ensure transparency, your advisor should provide a comprehensive explanation of their fees upfront, and it's advisable to request a detailed, written breakdown of any mortgage broker fees before entering into any commitments.
Is a mortgage broker’s fee worth the money?
A mortgage broker's fee can prove to be a wise investment, quickly recouped if your deal surpasses the competitiveness of the next best offer. In many cases, paying mortgage broker fees is a prudent decision, given the likelihood of offsetting the costs through the savings achieved on your mortgage.
Moreover, the services of advisors extend beyond mere mortgage recommendations, rather also including effective communication with your estate agent, coordination with your conveyancer, and assurance of mortgage underwriter satisfaction, all while keeping you well-informed throughout every stage of the process.
Speak to a mortgage advisor today
If you're still uncertain about who bears the cost of mortgage broker fees or the overall expenses associated with a mortgage advisor, allow us to clarify.
At The Mortgage Genie, we comprise a team of seasoned mortgage brokers who recognise the pivotal role of a broker in securing a mortgage. We stand prepared to guide you through the entire process, offering comprehensive assistance in exploring your options and pinpointing a lender that aligns with your specific needs.
For more details on the support we can provide, feel free to reach out to us today at 01915809890. Additionally, discover your potential borrowing capacity right now by using our mortgage calculator.
