Mortgage Broker Fees: How Much Does a Mortgage Broker Cost?
, by Matt Stevens
When applying for a mortgage, it’s sensible to keep costs down where possible, but this can sometimes lead people to skip using a mortgage broker. Ironically, this is exactly when an advisor's expertise proves most valuable. They compare deals from a range of lenders to find the most suitable and cost-effective option for your circumstances, saving you both time and stress.
That said, understanding how much you should pay for mortgage advice isn’t always straightforward. That’s why we’ve put together this guide, to give you a clear idea of the typical cost of mortgage advice in the UK.
What is the average cost of a mortgage advisor?
The cost of using a mortgage broker can vary depending on how they choose to charge for their services. Some advisors request an upfront fee before beginning their search for suitable lenders, this is often between £300 and £600, though it can be higher or lower in some cases.
Others may use a flat-rate model based on a percentage of your total mortgage amount, typically ranging from 0.3% to 1%. While this might seem straightforward, such fees can add up quickly, so it’s essential to understand the full cost structure before committing to a broker.
Mortgage broker fees if your situation is complex
If your circumstances are more complicated, you will find it harder to secure a mortgage, and some brokers can charge additional fees to reflect the extra time and work involved. This could total to between £500-1000 and includes situations where financial details have been missed or not fully disclosed, leading to delays or requiring further documentation and research.
To avoid unexpected costs, it’s wise to review the mortgage broker’s fee disclosure form carefully before agreeing to proceed.
What are the different types of mortgage advisors?
There are two main types of mortgage advisors: tied (or ‘multi-tied’) and independent.
Tied or multi-tied brokers are linked to a single lender or a limited panel of lenders. They can only offer advice on mortgage products from those specific providers. While they often don’t charge a fee, as they’re paid by the lender, this limited access means you could miss out on more competitive or suitable deals available elsewhere.
Independent mortgage brokers, also known as ‘whole-of-market’ brokers, are not tied to any particular lender. They can access and advise on mortgage products from across the entire market, including deals not available directly to the public. In some cases, lenders offer exclusive rates through brokers that you wouldn’t get by going to the bank yourself. Independent advisors also act as advocates, negotiating with lenders on your behalf to help secure the most suitable mortgage for your needs.
How much commission do mortgage brokers receive?
Independent mortgage advisors usually receive a commission from the lender you end up choosing, known as a procuration fee. This typically amounts to around 0.35% to 0.4% of the mortgage value. For example, for a £100,000 mortgage, a broker would receive £350.
Some brokers also charge an extra fee on top of this, either as a flat upfront payment or a refundable fee, which is returned if they’re unable to secure a mortgage for you.
Brokers are required to provide a written quote outlining any fees before you agree to proceed. If a fee is charged, they should also make it clear whether it’s payable upfront or on completion of your mortgage.
Other mortgage advisor fees
Some mortgage advisors can charge additional fees, which can vary between brokers. These might include finder’s fees, underwriting fees, application fees, or cancellation charges.
It's worth noting that some of these fees are purely for the broker’s compensation and won’t go towards your actual mortgage. Also, all mortgage brokers operating in the UK must be authorised and regulated by the FCA, or act as an agent of a regulated firm, and this regulatory oversight can also influence the fees they charge.
What is a fee-free mortgage broker?
A fee-free mortgage broker offers a more cost-effective option for many borrowers. Instead of charging you directly, they receive a commission from the lender once your mortgage completes.
However, be aware that some brokers may advertise fee-free advice only for the initial consultation. To avoid any surprises, your advisor should clearly explain how they are paid and provide a detailed written breakdown of any potential charges before you proceed.
Are mortgage broker fees worth the money?
Mortgage broker fees can often be a worthwhile investment, especially if they secure a deal that’s more competitive than what you could find on your own. In many cases, the savings gained over the term of the mortgage can more than offset the cost of their fee.
Beyond finding the right deal, mortgage advisors also offer valuable support throughout the process. This includes liaising with your estate agent, coordinating with your conveyancer, and ensuring the lender’s underwriter is satisfied, all while keeping you informed at every step.
Mortgage broker fees vs commission
Whether a mortgage broker is paid via commission or charges a direct fee, the quality of advice you get shouldn't necessarily be affected. Commission-based brokers can still offer impartial guidance, but it’s wise to confirm their independence at the outset.
In some instances, paying a fee upfront can be worthwhile, particularly if the most suitable mortgage deal doesn’t offer commission, or offers too little to cover the broker’s time and expertise. While this may involve an initial cost, it could lead to a better-value mortgage in the long run, ultimately saving you more than the fee itself.
Speak to a mortgage advisor today
If you're still uncertain about who bears mortgage broker fees or the overall cost associated with a mortgage advisor, allow us to clarify. Broker services are often wide-ranging and can include searching the whole market for the most competitive deals, assessing your affordability, negotiating terms, managing paperwork, overseeing your application, and ensuring everything stays on track to meet key deadlines. They’ll also consider a variety of mortgage products to find those that best suit you.
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.
The above blog has information contained within which was correct at the time of publication but is subject to change.
