Free mortgage broker or paid? What brokers really charge, and when a fee is worth it

Fee free mortgage broker or paid? Either can be the right choice, as both receive a payment from the lender, typically £900 to £1,350 on a £300,000 mortgage, Newspage research sponsored by Heron Financial shows, while a fee tends to earn its keep on more complex cases.

Mortgage brokers have told Newspage that the word ‘free’ "tends to bury" how brokers are paid, and urged borrowers to "ask for both numbers" before they sign up.

Newspage asked eight brokers what they charge. Six take a fee on a standard mortgage, ranging from £149 to £599, while the two fee-free firms rely on the lender's commission alone.

Brokers said a fee can be worth paying when a case needs extra work, such as self-employed income, poor credit or landlord portfolios, and that loyal clients can often remortgage without paying again.

Matt Coulson, Founder at Rickmansworth-based Heron Financial, said: "We don't charge our clients a fee, and haven't for years. But we're still paid, and that's the part the word 'free' tends to bury.

"The lender gives us a procuration fee on completion, usually around 0.3% of the loan, about £900 on a £300,000 mortgage. So we show every client that exact figure before they commit to anything.

"Whether the fee sits with the client or the lender matters far less than whether you can see it at all. A firm that charges and tells you its number is being straighter than a 'free' one that never mentions its commission.

"None of which makes charging wrong. On a genuinely complex case a fee can be fair, and plenty of good brokers earn theirs. The real test is daylight.

"Ask any broker four things: is there a fee, when do I pay it, do I get it back if the deal collapses, and what is the lender paying you. Ask for both numbers. The work behind a mortgage is far bigger than most people ever get to see."

How much do mortgage brokers charge?

Fees for a standard mortgage range from nothing to £599 among the eight brokers Newspage spoke to, and most take the fee once the mortgage offer is issued.

Source: Newspage research

Compton Financial Services lowers its fee as the loan grows, charging nothing on mortgages above £500,000.

Several brokers also waive the fee for returning clients. Compton Financial Services lets existing clients remortgage fee-free, and PMS Mortgages never charges a client again to remortgage the same property.

Tracey Dixon, Buy-to-Let Mortgage Specialist and Owner at Cardiff-based Pure Mortgage and Protection, said: "My fee becomes payable on offer, but my support continues through to completion. I normally charge £425, rising to around £595 for complex cases, and may reduce this depending on the work involved.

"The value lies in researching lenders, navigating criteria and resolving problems, particularly with complex income or landlord portfolios.

"Charging a fee does not automatically mean better advice, just as fee-free does not mean a lesser service. Borrowers should ask what is included, when the fee is payable, whether it is refundable if the mortgage falls through, and what lender commission the broker receives."

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said most of his clients "have paid little or no fees" for their mortgage advice over the years.

He added: "Not that I don't value my expertise, but simply to build a business over time and to remove as many pain points for borrowers as possible.

"Where I have started to charge fees more regularly, it has been with more complex work, typically where clients have poor credit, complex incomes, or large portfolios that take hours of admin just to get to a Decision in Principle.

"My normal fee is now around £149, payable on offer, and normally no more than £499 for anything with adverse or complex issues. I don't see the need to charge thousands to people who have already had money issues. That just seems to add to the burden, not encourage those to get back on the housing ladder."

How are fee-free mortgage brokers paid?

Brokers are paid by the lender, through a procuration fee of around £900 to £1,350 on a £300,000 mortgage, brokers told Newspage.

The payment is made when the mortgage completes and is typically 0.3% to 0.45% of the loan. Heron Financial receives around 0.3%, or about £900 on £300,000, while Lansdown Financial Services says its average mortgage, above £350,000, earns around £1,400.

Roxton Wealth, Compton Financial Services and PMS Mortgages put the payment on a £300,000 mortgage at £1,050 to £1,350. Fee-charging brokers receive this commission too, on top of their fee. Brokers said the figure is shown on the mortgage illustration before the borrower commits.

Because the payment is a percentage of the loan, it shrinks on smaller mortgages. Lansdown said a broker arranging a £100,000 mortgage might earn £400 for the same work.

Doug Miller, Mortgage Broker and Director at Bath-based Lansdown Financial Services, said: "It's the age old debate in the mortgage industry: to charge a fee or not. Our philosophy is simple: if we can deliver excellent mortgage advice without charging clients a penny, why should we?

"The reality is that mortgage size changes the economics. Our average mortgage size exceeds £350,000, generating around £1,400 in lender commission, which we disclose to our clients. A broker arranging a £100,000 mortgage might earn just £400 for doing exactly the same amount of work. It's understandable why some brokers need to charge a fee.

"But let's bust the myth that paying more means getting better advice. A £500 broker fee doesn't guarantee you a better mortgage, and paying nothing doesn't mean you're getting a second-class service.

"Borrowers should always ask how their broker is paid, when their fee is due and what they're getting in return. After all, you want the right mortgage, expert advice and an adviser who picks up the phone, not the biggest broker bill."

Is a fee-free mortgage broker really free?

A fee-free broker costs the borrower nothing directly, with the cost of the advice met by the lender instead.

Brokers on both sides said fee-free and fee-charging firms can each give good advice, while Heron Financial said what matters most is whether the borrower can see what the broker earns.

Staton Mortgages, which charges a fee, said borrowers should ask how a fee-free model works, as revenue tied entirely to commission can encourage a broker to prioritise volume.

Mike Staton, Director at Mansfield-based Staton Mortgages, said: "At Staton Mortgages, we charge £599 for standard mortgages, rising to a maximum of 1% for particularly complex cases.

"Our clients aren't simply paying for a mortgage application. They're paying for expert advice, dedicated case handlers, award-winning administrative support and someone fighting their corner from the first conversation through to completion.

"We focus on customer service, not processing as many mortgages as humanly possible. Fee-free doesn't necessarily mean poor service, but borrowers should ask how that business model works. When revenue depends entirely on lender commission, there's a commercial incentive to prioritise volume.

"I'd rather charge a transparent fee and deliver an exceptional service than treat clients like another number on a spreadsheet."

Nouran Moustafa, Practice Principal and IFA at Roxton Wealth, said: "At Roxton Wealth, our standard mortgage broker fee is £500, payable only when the mortgage offer is issued, not upfront. Fees can vary for specialist cases.

"Lenders also pay procuration fees, commonly around 0.35% for mainstream residential mortgages. That's £1,050 gross on a £300,000 loan, although actual payments vary and we disclose our remuneration.

"But here's what frustrates me: people assume fee-free means free advice. It doesn't. The broker is still being paid, usually by the lender. Equally, charging a fee doesn't automatically make someone a better adviser.

"A £500 fee could be excellent value if an adviser saves you thousands or successfully navigates a complicated application. It could be poor value if you're receiving little beyond basic administration.

"A mortgage broker's value shouldn't be measured by their fee. It should be measured by the quality of the advice and the outcome."

When is paying a broker fee worth it?

Brokers said a fee earns its keep when a case needs real work, such as self-employed or contractor income, credit problems, gifted deposits or large landlord portfolios.

For a simple product transfer with an existing lender, PMS Mortgages said a borrower may not need a broker at all.

Martin Rayner, Financial Adviser at Compton Financial Services, said: "Our fees are simple: £495 up to £250,000, £295 up to £500,000 and zero above. Charged at application, with higher fees for expat, Sharia and second-charge cases. Existing clients remortgage fee-free.

"Lenders typically pay 0.35% to 0.40% on completion, or £1,050 to £1,200 on £300,000. This is clearly disclosed on mortgage illustrations.

"Is a broker worth paying? How much is your time worth? More importantly, what could choosing the wrong mortgage cost you? We also monitor rates until completion, securing cheaper deals if rates fall.

"A 0.25% reduction on £300,000 could save around £1,500 in interest over two years. Against a £295 fee, the maths speaks for itself.

"Do clients understand all the work involved? Probably not, but why should they? The whole point of using a broker is to remove that complexity and make the process straightforward."

Ria Ali, Director at PMS Mortgages, said: "PMS Mortgages charges new clients a flat £479, payable only once a mortgage offer is issued: no offer, no fee. After that, we never charge them again to remortgage the same property, for as long as they own it.

"Lenders typically pay brokers 0.35% to 0.45% on completion, roughly £1,050 to £1,350 on a £300,000 mortgage, disclosed in the client's illustration before they commit.

"A fee is worth it when the case needs real work: self-employed, contractors, credit blips, gifted deposits. On £300,000, a rate 0.3% lower saves about £900 a year, nearly double our fee. A simple product transfer with your current lender may not need a broker.

"Most borrowers don't see the fact-finding, document checks and chasing of underwriters and solicitors behind every offer. 'Fee-free' doesn't mean free work; the cost is just paid elsewhere."

What to ask a broker about fees before you sign up

Whether a free mortgage broker or paid one, brokers urged borrowers to ask about fees before signing up, with most landing on the same four questions: is there a fee, when is it paid, is it refundable, and what is the lender paying you.

Brokers also suggested asking whether a second application is covered if the first is declined, and whether the broker will charge again at remortgage.