Yes, some mortgage brokers charge a fee and some do not. Where a fee is charged, it is usually either a fixed amount or a percentage of the mortgage, and brokers who charge no fee at all are instead paid a commission by the lender. None of these models is automatically cheaper or better than the others, so it is worth understanding how each one works before you commit to an adviser.
How mortgage brokers actually get paid
A mortgage broker can be paid in one or both of two ways:
- Lender commission (procuration fee): when your mortgage completes, the lender pays the broker's firm a commission, typically calculated as a small percentage of the loan amount. This happens whether or not the broker also charges you a fee.
- A client fee: some brokers also charge you directly, either as a flat fixed fee or as a percentage of the mortgage amount.
A broker who says they are "fee-free" is telling you they are not charging you on top of the lender commission, not that the advice is free to provide. The firm is still being paid; it is just being paid by the lender rather than by you.
The three common fee structures
Fixed fee
A fixed fee is a flat amount agreed upfront, regardless of the size of your mortgage. As an illustrative example only, fixed fees in the UK market commonly sit somewhere in the low hundreds of pounds, though this varies a great deal by broker, by the complexity of the case, and by how much ongoing support is included. A fixed fee has the advantage of being predictable, and it does not scale up simply because you have borrowed more.
Percentage fee
A percentage fee is charged as a proportion of the mortgage amount, for example a small percentage of the total loan. The advantage for the broker is that the fee reflects the size of the transaction; the disadvantage for you is that, on a larger mortgage, a percentage fee can end up considerably higher in cash terms than a fixed fee would have been for the same amount of work. If you are offered a percentage-based fee, it is worth asking what that translates to in pounds for your actual mortgage amount before agreeing to it.
No fee (commission-only)
Some brokers, including advisers at The Mortgage Experts, do not charge clients a fee at all and are remunerated entirely through the commission paid by the lender. This does not mean the advice is worth less. It means the broker's income is tied to the mortgage completing, which is worth bearing in mind, but it is balanced by the fact that reputable brokers are bound by regulatory obligations to recommend a suitable mortgage for your circumstances, not simply the one that pays the most.
Is a fee-free broker always the better deal?
Not necessarily, but it is often a sensible starting point. Since you are not paying anything extra out of pocket, a fee-free arrangement removes one variable from the decision and lets you focus on whether the broker has access to the right range of lenders, understands your circumstances, and communicates clearly. If you are comparing brokers, it is reasonable to ask directly whether they charge a fee, how much, and when it is payable, since some brokers charge fees upfront and others only on completion or offer.
Questions worth asking any broker about fees
- Do you charge a client fee, and if so, is it fixed or a percentage?
- Is the fee payable upfront, on mortgage offer, or only on completion?
- Is the fee refundable if the mortgage does not go ahead?
- Do you also receive commission from the lender, and does that affect which lenders you recommend?
- Are there any other charges, such as for protection advice or a remortgage in future?
Asking these questions upfront avoids any surprises later, and a broker who is comfortable answering them plainly is usually a good sign in itself.
What this means in practice
The honest answer is that the fee structure matters less than the quality of the advice and the breadth of the lender panel behind it. A broker charging a modest fixed fee but with access to specialist lenders for your situation, adverse credit or self-employed income for example, may get you a better outcome than a fee-free broker with a narrower panel. Equally, if your situation is straightforward, there may be no reason to pay a fee at all when a commission-only broker can do the job just as well.
What you should not do is choose a broker on fee structure alone, or assume that free automatically means lower quality, or that a fee automatically means better service. It comes down to what is included, how experienced the adviser is with cases like yours, and whether they are transparent about how they are paid from the first conversation.
Frequently asked questions
Do I pay a mortgage broker fee even if my mortgage application is declined? It depends on the broker and when the fee is charged. Some charge upfront regardless of outcome, others only charge on offer or completion, and some fee-free brokers charge nothing either way. Always confirm this before you proceed.
Is it cheaper to go directly to a bank instead of using a broker? Going direct avoids any broker fee, but it also means you only see that one lender's products, and you lose access to deals that may only be available through brokers. A fee-free broker can often match the cost of going direct while still giving you a wider choice of lenders.
Do mortgage brokers charge fees for remortgages as well as new purchases? Some do and some do not; it is worth checking, since a few brokers charge separately for a remortgage even if the original purchase was fee-free. Ask this question at the outset so there are no surprises when the time comes.
If you would like a clear answer on what advice would cost you, with no obligation and no pressure, get in touch with The Mortgage Experts and we will talk you through exactly how we are paid and what you can expect.