Mortgage advisors, also known as mortgage brokers, are the superheroes of mortgages. They can help you find the best deal and will even sort out your whole mortgage application for you, saving you a ton of money in the long run. But how much do mortgage advisors charge?
Here, we’ll look at everything to do with mortgage broker fees, from who pays to whether free mortgage advisors are worth it. But first things first...
How do mortgage advisors make money?
Mortgage advisors get paid a fee by mortgage lenders (mortgage lenders are the people that give out mortgages). In other words, when you get a mortgage with the help of a mortgage advisor, your mortgage lender will pay them a fee, straight out of their own pocket.
This fee will normally be a percentage of the size of your mortgage, known as a commission – often around 0.35%.
Let’s imagine your mortgage advisor helps you get a £200,000 mortgage. In this case, they’ll probably get paid around £700 by your lender (0.35% of 200,000 = 700).
Wondering what the catch is? Well, there isn’t one.
You won’t pay any extra. In fact, you’ll get just as good a rate using a mortgage advisor as you would if you went directly to the lender, and sometimes better. Your broker will basically do all the hard work (for both you and your lender!), so your lender is happy to pay them for it.
Now, a few mortgage advisors will be happy to just get paid in this way, which means you won’t have to pay a penny. This is getting increasingly common, as technology is making a mortgage advisor’s job less and less time-consuming. Plus, there are now lots of free mortgage brokers who help you compare mortgages online, which we’ll tell you about in a bit.
However, other mortgage advisors will charge you a fee on top of what they get paid by your mortgage lender, especially those that prefer to work in the more traditional way in-person and over the phone. These mortgage brokers often work for fewer customers at once which often means you get better service but will get charged for the pleasure of it. Which brings us onto...
What are typical mortgage broker fees?
Okay, so let’s imagine you’re using a mortgage broker who charges you a fee on top of the commission they get from your lender. How much can you expect to pay?
Well, it depends on the broker. Some mortgage advisors will charge you a fixed fee, while others will charge you a percentage of the total mortgage you’re applying for. Those that charge you a percentage will usually ask for between 0.3% and 1% of the value of your mortgage.
Ultimately, the average mortgage broker fee is between £200 and £500.
Nuts About Money tip: if your broker wants to charge you more than £500 for a relatively normal house purchase or remortgage (where you swap an existing mortgage for a new one) then you’re probably overpaying and should find a new mortgage broker.
Anyway, £200 to £500 might sound like a lot but remember, your broker is there to help you find the best deal. So, as long as you use a whole-of-market mortgage broker (one who can compare all the different mortgages from all the different lenders, rather than just a few), they’ll normally save you a lot more than that in the long run.
You can use our free find a mortgage advisor service to find the right broker for you.
Should I choose a free mortgage advisor or one that charges fees?
That depends on what your priorities are.
If all you’re interested in is finding the best deal on your mortgage then normally, it won’t really make a massive difference whether you choose a free mortgage advisor or one you have to pay for. As long as you choose a whole-of-market mortgage advisor who can compare all the different mortgages and lenders to find you the best deal – rather than a broker who’s agreed to recommend just a handful of lenders – the end result should be the same. You should (fingers crossed!) end up with the best deal available to you.
If your mortgage is a simple one, you could even use a free online mortgage broker, which we’ll tell you about in a minute, and expect to end up with the same end result.
However, not everything’s about the end result. Service can range between mortgage brokers quite a bit, so if you want a really great experience with a super supportive mortgage broker, you might want to consider paying for one (although of course, a higher cost doesn’t always mean better service!).
In fact, that’s not the only reason. Here are a few scenarios where paying for a mortgage broker might be the best solution for you.
- Great service: Even though mortgage brokers are the superheroes of mortgages, some are just a little bit more superhero than others! If you want amazing customer service, you might choose to pay more for it. However, do your research because expensive isn’t always best and lots of free brokers have great service too.
- Specialist broker: If your situation is complicated, you might need to pay for a specialist mortgage advisor who has experience helping people like you. For example, you might need a specialist broker if your credit score is low (your credit score is a number that shows lenders how good you are with money) and you want a mortgage with bad credit, or if you want a mortgage to buy commercial premises.
- Small mortgage: Some mortgage brokers will charge you a fee if the mortgage you’re applying for is below a certain size. This is because if you only apply for a small mortgage, the percentage commission they’ll get from your lender might be too small to justify the amount of time they spend helping you.
- Best deal: There are a few lenders out there who’ll refuse to pay your mortgage broker commission, or who’ll offer a commission so low that it’s not worth your broker’s while. If the best mortgage for you is with one of these lenders, your broker might charge you a fee. But it’ll be worth it for the saving you’ll make over the duration of your mortgage!
At the end of the day, if you can find a free mortgage broker with great customer service who can compare all the deals available to you, then happy days! Who wouldn’t want to save a few hundred pounds if they could?!
However, if you find a mortgage broker that you like and they charge you a fee, we wouldn’t worry too much. Yes, it might sound like a lot of money now, but the idea is they’ll save you way more than that in the long run. Just make sure you find out whether they charge a fee before you choose your broker so you’re not caught by surprise.
Use our free find a mortgage advisor service for help finding the best broker for your needs.
Are free online mortgage advisors worth it?
An online mortgage advisor is an online service that helps you compare mortgages and find a great deal with barely any human interaction. Basically, they do everything that a regular mortgage advisor would do, but almost all of it is through an app or website. Crazy, right?!
Normally, you just fill in an online form or send some details via an app and hey presto! You can compare the best lenders and deals available. Then, once you’re ready to apply, a human will fill in the application form for you.
So, should you use one? Here are the main pros and cons.
- It’s free. One great thing about online mortgage advisors is that they’re almost always free for you to use. Hooray! Just bear in mind that there are other mortgage brokers who don’t operate online that are also free. So, this shouldn’t be the only reason you opt for an online mortgage broker (it is a bonus though!).
- It’s quick. Because a computer is hunting for deals for you rather than a human, using an online mortgage broker is usually a lot quicker. Some claim that they can help you find and apply for a mortgage in just 15 minutes!
- 24/7. If you’re busy and would struggle to chat to a mortgage broker during office hours, an online mortgage broker could be super convenient. You can find a deal at any time of the day instead of having to wait for a human to be available.
- Less support and advice. Online mortgage brokers are centred around helping you to find a deal. This means they’ll generally be less support available for you at the early stages when you simply want to find out your options and get some general advice.
- Limited human interaction. It sounds obvious, but with an online mortgage broker, you’ll get hardly any human interaction. You’ll need to speak to a human when you’re ready to apply, but there won’t be room for asking questions or just chatting things through. So, you won’t get that handholding or reassurance that you might with a more traditional broker.
- Less bespoke. An online mortgage broker will ask you to give them your details via an online form or app. This won’t allow you to get into all the nitty-gritty details that could affect which deal is best for you like you could if you were chatting to a human – especially if your situation is fairly complicated.
As you can see, there are lots of benefits to free online mortgage brokers, especially if your situation is straightforward and you don’t feel like you need to ask a human for advice. That said, there are some things that a computer just can’t replace.
A human broker will be able to give you that extra support that you won’t get from an online service. And some will be able to do it for free too!
Ready to find a mortgage advisor?
Whether you’re happy to pay for a mortgage advisor or you’re set on bagging yourself a free one, one thing is for sure: finding the right mortgage advisor is key to getting the best mortgage deal possible and saving a ton of money on your monthly repayments.
If you need some help finding a broker, check out our free find a mortgage advisor service. With a little help, we have every faith that you’ll be jangling the keys to your brand new home before you know it!