Should mortgage brokers charge clients a percentage of the loan?

Shazad Ahmed, founder of Elan Property Finance, has questioned whether percentage-based broker fees fairly reflect the work involved in arranging finance.

His argument is that a £500,000 loan is not necessarily ten times as much work as a £50,000 loan. Brokers charging a percentage may, however, consider factors beyond time spent, including complexity, responsibility, value delivered and the risk of working on cases that do not complete.

For Bridging Loan Directory, I’m particularly interested in how this applies to bridging and specialist property finance.

If you are a broker, borrower, property investor or compliance specialist:

• Do you favour fixed, percentage, tiered or hybrid fees, and why?
• Should loan size influence the fee if it does not determine the workload?
• Do minimum fees or caps make percentage charging fairer?
• Should complexity, urgency or the risk of non-completion affect the charge?
• When should a broker fee become payable, and what happens if the loan does not complete?
• How should client fees and lender commission be explained?

Worked examples showing what would be charged on comparable £50,000, £500,000 and £1 million loans would be particularly useful.

Please distinguish your own charging model or experience from your general opinion.

Responses of around 100–200 words by 12 pm on Friday 11 September, please.