How Much Does A Mortgage Broker Charge In Fees? (2024)

Using a broker can take the stress, hassle and time out of finding a new mortgage deal – and there isn’t always a fee for the service.

Read our guide to find out what service, fees and charges to expect when using a mortgage broker. Plus how brokers make their money when they don’t charge customers an upfront fee.

What is a mortgage broker?

A mortgage broker helps people find a mortgage deal suitable for their needs. Depending on how they are set up, some brokers can only recommend from a small pool of different lenders’ deals, while others can scour the majority of the mortgage market before making recommendations (more on this below in our FAQs section).

Brokers can usually help first-time buyers, homemovers, those looking to remortgage onto a new mortgage deal, buy-to-let borrowers and those buying second homes, holiday homes, and, in some cases, purchasing property abroad.

A mortgage broker will find out information about the borrower’s financial position, their property and the kind of mortgage deal they want, such as a fixed rate deal or tracker rate, before matching them to a range of different deals from the market. They can then advise borrowers about the best option based on that information.

Once you’ve chosen the home loan deal you want, a broker can then apply to the lender on your behalf and keep you updated of the progress of your application right through to completion.

Most brokers conduct business over the phone or online, although in some cases it may be possible to meet with a mortgage advisor or broker face to face.

Read more about how brokers work and the pros and cons of using a broker in our pick of the best mortgage brokers.

How much does a mortgage broker charge in fees?

This depends on the mortgage broker and its fee structure. Different mortgage brokers make their money in different ways. While some brokers charge customers an upfront fee for their advice and service, other brokers are ‘fee-free’.

Instead, a fee-free broker earns its money through commission, known as a ‘proc fee’ (procurement fee) that the lender pays to the broker when a mortgage deal completes. But in this case there is no charge to the borrower.

The typical types of mortgage broker fee structures are:

• commission or ‘proc fee’: some brokers don’t charge customers any fees at all for their service, receiving a commission or procurement fee from the lender instead (on completion of the mortgage deal). The typical proc fee paid to the broker for a residential mortgage is around 0.35% to 0.4%
• upfront broker fee: you might be charged a flat rate, upfront fee by your mortgage broker for their advice and service. This could be a fixed charge, such as £500, for example. But in some cases the fee might be a percentage of your mortgage loan, such as 0.5% or 1%
• flat fee and commission: in other cases a mortgage broker may earn their money from a combination of charging customers an upfront fee, but also by taking proc fees/commission from lenders.

Fees or commission: which is better?

There isn’t a broker fee charging structure which is better than another. It depends on the service and fee you want to pay, or what you’re most comfortable with.

Some people choose a mortgage broker because it has excellent service, for example. While others may select a broker because it has a specialism in a certain area, such as helping self employed borrowers or those with bad credit find a mortgage, or helping those looking for multi-million-pound loans.

It is important to understand the fee structure of any mortgage broker you use. If something is not clear, ask your broker to explain the exact fee, what it is for and when it must be paid.

Also ask if the broker can recommend mortgage deals from across the market, or if it is tied to a particular panel of lenders, in which case it can only recommend deals from those specific lenders (see FAQs for more on whole-of-market brokers).

How will I know what fees I’m being charged by my mortgage broker?

Under rules from regulator the Financial Conduct Authority (FCA), brokers must clearly set out their fee structure in advance to customers in writing, including any commission they receive for the deal.

The broker must also clearly explain when any fees will be charged to the customer before they proceed with the application.

Is it worth paying a fee for mortgage advice?

It can be worth paying a fee for mortgage advice, as finding the lowest cost mortgage deal for your circ*mstances can save you money over the term of the deal. A broker has the technology and systems to search hundreds of mortgage deals from across the market to find those that are most suitable for its customers – and deals they’ll likely be accepted for.

In some cases lenders may offer ‘broker exclusive’ deals, which are only available to borrowers going through a mortgage broker. This can be another advantage of using a broker.

Some mortgage brokers have specialist expertise and knowledge, for example, in finding the best lenders and mortgage deals for self employed borrowers, high net worth individuals or those with a history of bad credit, who may need more tailored help and advice.

In these instances, paying a broker fee can be worthwhile to secure the right mortgage.

When do I pay the mortgage broker fee?

If you’re using a fee charging broker, when you’ll need to pay the broker’s fee will depend on their own policies. Sometimes it might vary depending on the type of mortgage deal you’re taking out. For example, the charge and when it is paid might be different for first-time buyers compared to borrowers who are remortgaging, or those opting for a product transfer (this is a mortgage deal offered by a borrower’s existing lender).

Many brokers don’t charge a broker fee for mortgage transfer deals.

With some brokers you’ll be required to pay the broker fee, if there is one, at the point of your mortgage application. With others it might be when a mortgage offer comes through, or at the point of mortgage completion.

Will I still pay a broker fee if my mortgage deal falls through?

In most cases with fee-charging brokers, if you decide not to proceed with a mortgage they have recommended, or your house purchase or mortgage deal falls through for some reason, then you won’t usually be charged the fee.

Always check in advance with your broker, about its terms and conditions in these circ*mstances. You may also want to ask for the details in writing so you’ll know where you stand on paying fees should you not proceed with the mortgage.