Mortgage Broker Fees
L & C is a fee-free mortgage broker, but we’ve put together this guide to help you understand the different ways mortgage brokers and advisers can charge for their service.
When you go to a mortgage broker to help you choose and apply for a mortgage, it’s important to understand whether or not you will have to pay for this advice. Almost all mortgage brokers are paid a commission by lenders of around 0.37% of the mortgage loan. Some mortgage brokers also charge a fee to their customers.
Mortgage brokers generate income in several different ways:
- Fee-free. Here at L&C, rather than charging our customers for advice, we are paid a commission directly by the lender. That means you don’t have to pay us a penny for our services. Once we’ve recommended a particular mortgage, you will receive a mortgage illustration document, known as an ESIS (European Standardised Information Sheet). This will tell you about any costs relating to the mortgage. Similarly, if you are buying insurance from us, you will receive a quotation which will tell you about any other fees relating to the policy you are buying, but you won’t be charged for the advice you receive.
- Hourly rate. Some mortgage brokers charge by the hour, so you should always get an idea upfront of how long it is likely to take for the broker to find you a mortgage and guide you through the application process.
- Fixed charge. You might be charged a fixed fee, e.g. £499, for mortgage advice.
- Percentage. Some brokers charge a percentage of the mortgage you are taking out. For example, if you need a £250,000 mortgage, and their fee is 1%, you will have to pay a £2,500 charge.
- A combination. Some brokers will use a combination of the charges mentioned above. So, for example, they might receive commission from the lender, but will still charge you a fee on top.
Always check with any broker you are considering using how much you will be charged and make sure you have this information in writing before you proceed. Even though we at L&C don’t charge you any fees, we will always let you know exactly how much we will receive in commission from the lender.
As well as understanding how much you’ll have to pay for mortgage advice, you should always check with any broker you are considering using whether the advice they offer is restricted or not. If it is restricted, that means they will only be able to offer you mortgages from one or just a few lenders.
At L&C we’re not tied to any particular provider or a limited selection of providers which means we can look across the mortgage market to help you find the right deal to suit your needs.