Mortgage Broker’s Fees & Charges
Working alongside a trustworthy mortgage broker helps you get the best advice in the mortgage market to guarantee you get the most suitable deal to fit in your financial circumstances, however, it is important to know broker fees before settling with one.
Here are the common mortgage broker costs you may face.
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The Different Types Of Mortgage Broker Fees
All mortgage brokers have different pricing structures, so their fees vary considerably. While most agents charge a fee, others don’t charge their clients anything and are often paid by the lender.
Mortgage broker expenditures range because each situation is separate. Some mortgage applications need more time and work compared to straightforward ones. A good broker should disclose their prices to make sure you factor that into your budget.
Here are the different types of fees you may see.
Hourly rate
Mortgage brokers can make their funds by having a set rate for each hour they spend on your application. So, if your loan application is complex and takes a while, you will find that the broker fees will rack up quickly. Make sure you get an estimate of how much time the process may take and how much you may end up paying.
Percentage
Mortgage brokers can also charge a portion of the amount of the mortgage that you’re taking out. This percentage ranges from 0.3 to 1% of the amount, and it cannot change. Your payment may be higher than the normal mortgage broker fee for high-value houses/properties.
Fixed fees
Other mortgage brokers charge a fixed price, which is more transparent. Some fees are charged upfront or after completing the entire mortgage application. It ranges from £300 to £500. This does not include extra costs.
Combination
Mortgage brokers also charge their clients using a mixture of the above. They can have a set hourly rate but still receive a small charge from the lender. Mortgage brokers who do not work on commission only aim to lessen the chance of mortgage deal falls, which means they lose out on their payments.
Fee-free mortgage brokers
This is an affordable solution for clients who don’t want the extra cost of a broker. These brokers make their cash by getting paid from the lender instead. You will get their expertise without a high cost, which is a plus for you!
However, you must be wary of these brokers, as they may try and trick you into going into a huge mortgage deal so that they can get a better commission. Remember, the mortgage broker has to work according to your financial budget.
Types of Commission
Mortgage broker fees also come from commissions that are paid by the lenders as a percentage of the mortgage. This can happen in two parts: trailing commission or upfront commission.
The trailing commission is an ongoing commission payment made by the lender or bank and is a small percentage (usually 0.15%) of the remaining mortgage amount for each year you have the loan. This type of commission was supposed to be removed; however, changes are still yet to take place.
The upfront commission is more common, and this is the amount that is paid to the mortgage broker according to the commission rate of the lenders. It is more fixed than a trailing commission.
Why Does A Mortgage Advisor Have Fees?
Your mortgage broker has to do a lot of things to ensure that your application is set out properly for the bank or lender. Their services include them doing the following:
- Finding you an inexpensive mortgage by working with your financial affordability.
- Filling out and managing all the paperwork.
- Finding and negotiating good deals by comparing to the whole mortgage market.
- Directing you through the application process and overseeing that you’re meeting deadlines etc.
- Answers your questions about the process and offer mortgage advice.
- Comparing the scope of mortgage lenders and products to deduce which mortgage deal is best for your financial needs.
How Does A Mortgage Broker Help You Save Money?
Although some mortgage brokers charge a fee, they help you save quite a bit of money in mortgage costs.
The mortgage broker protects you from fraud
Mortgage advisors have access to databases of other fraudulent activity they have seen. It has everything from predatory lending practices, identify theft, and various other activities. Your broker will help you stay away from scams by knowing the pointers.
This, in turn, saves you money because you are protected against schemes and fraud.
Help you lessen fees
Mortgage fees can add up to a lot of money, which cannot fit into your financial budget. In the whole process, you might not realise how much money you pay until you see the whole thing in writing. This is why it is important to know what you’re paying for before paying for it. A broker can help you minimise, and even avoid other charges.
They help you lessen closing costs by:
- Understanding all the closing costs
- Finding ways to avoid fees by negotiating with the lender
They help you find the perfect loan
Finding the right mortgage can be hard, as there are a lot of variables to think about. Since brokers are professionals who know the ins and outs of the market, they can find you the perfect loan that’s within your budget and financial needs.
An experienced broker will take the time to understand your situation and find a loan that fits that, which saves you money in the long run.
They help in the pre-approval phase
Your mortgage broker can also help you in the pre-approval process. This is a dependable way to know what kind of houses you can afford. The lender would do an analysis of the financial situation and your credit score and will check if your income will be steady for the time of repayment.
Having the pre-approval status doesn’t mean that you have to take the deal, it shows you how much the lender is willing to give you. You may use these options when negotiating with sellers/buyers during the whole process.
Saves time
Your broker will find you the best lenders and rates based on the form you filled out about your finances. From there, they will make the calls, file paperwork, and work with the underwriters.
Underwriters are people who fact-check the mortgage approval process, and they make sure that your information in the application is correct. They verify that you meet all the requirements for the loan. While checking in on them may seem like hard work, driving up and down, or leaving work, brokers can do all this leg work for you.
Protect your credit score
When you check lenders and multiple facilities on your own, your credit score is continuously checked by all these lenders, and the more inquiries made on your credit report can actually decrease your credit score. This raises red flags for other lenders, and they may not accept your mortgage deal.
A broker only has to check your credit score once and then submit that report to all potential lenders.
Having a long-standing relationship with your broker
A relationship with your broker doesn’t end when your mortgage is approved. They remain a good source of information and can be someone to talk to about any financial concerns and questions. A good broker will follow up on your loan after some years if they see a better one is available.
When you’re looking for future mortgage deals, using the same broker can save you money as they already know the type of financial situation you’re in and what kind of mortgages you prefer.
When Do I have To Pay The Mortgage Broker’s Fees?
Certain mortgage brokers may want upfront payment as soon as you hire them, while other brokers prefer to be remunerated after the loan has been authorized. You would see that most of the time, the mortgage lender pays the mortgage broker fees, and they will not add the cost to you.
However, it’s always a fair idea to make sure what the mortgage broker should pay and whether you should make the payment or the lender. Sometimes, you can negotiate your broker fees!
Even if your mortgage broker fee is fixed, you would still find the opportunity to save money. Since brokers are great negotiators themselves, they would love to negotiate with you. This is also a good way to see how good your mortgage broker is at negotiating, as the finest skills can get you the most satisfactory mortgage deals.
Can I Ask For A Refund On My Mortgage Broker Payments?
Some mortgage brokers have a refund policy in their broker agreement, while others do not. You have the right to complain if you have paid the fees and feel as if your mortgage broker did not sell you the proper product or did not give you the proper market advice.
If it is possible, you should raise any problems with your mortgage agent before you pay mortgage broker fees. You should check if there is a refund procedure before you sign any broker agreement. If it is not in there, you can ask the broker to include it or ask for a written agreement that you will not pay fees if the mortgage deal doesn’t go through.
FAQs
Are banks and second mortgages cheaper?
No. Whether you’re applying for your first or third mortgage, the mortgage broker costs will usually be the same. In this case, you may be thinking that going directly to the lender will save you costs, but this may not be the best arrangement.
You will not benefit from broker-only deals that are available in the market. Finding the best deal by going directly to one bank may be tough, as there are plenty of lenders to compare.
Loan Corp has affordable mortgage broker fees
Mortgage broker fees can be expensive, but here at Loan Corp, we aim to offer you the most affordable option while giving you the best advice. Consult with our trusted mortgage broker if you are interested in getting a mortgage!
Final Thoughts
If you want to find out everything you need to know about mortgage brokers, and how much one is going to set you back, then you should consider getting some expert mortgage advice from us here at Loan Corp, so contact us now to get started.