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How Do Mortgage Brokers Get Paid?

Buying a house can be expensive. Make sure you understand how mortgage advisors get paid and how you can avoid adding to your moving budget unnecessarily.

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 3rd October 2019 *

Buying a house can be expensive so it’s good to keep track of exactly what your money is paying for and what you’re getting out of it.

Costs such as stamp duty or removal vans can be set aside in preparation but have you ever considered how much a mortgage advisor will need to be paid and how they earn their money?

With that in mind, we’ve created this short guide to fill you in on exactly how mortgage brokers get paid and how they can help you find a cheaper deal.

No time to read? We have experts on hand ready to answer your questions. Talk to one of the mortgage brokers we work with by calling 0808 189 2301 or use our quick online form.

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How do UK mortgage advisors get paid?

Most mortgage advisors are paid on a commission basis meaning that, for every mortgage they successfully complete on behalf of their customers the advisor then gets paid a commission from the lender. 

Depending on the complexity of the case the adviser might also charge a fee for their services of advising and arranging the mortgage. This could either be on a fixed fee or percentage of the loan amount. 

Many of the mortgage brokers we work with are only paid when they successfully arrange your mortgage, if they are not successful they will not get paid. All of the brokers we work with will provide a full breakdown of their individual fees on your first conversation with them. 

For a free, no obligation chat, call 0808 189 2301 or make an enquiry online and find out how an expert mortgage broker can help you.

How much does a mortgage advisor get paid?

We work with specialist advisers throughout the UK. As such they all have different models, some will be employed and receiving a basic salary plus commission, others will be completely self-employed

 The amount a mortgage broker is paid can vary depending on several factors, such as:

  • Whether they are independent or not.
  • The loan size.
  • Any other products taken alongside the mortgage such as life insurance

Fess do vary between the advisors and firms that we work with. However, if your mortgage broker charged their fee as a percentage (1%) and you were granted a mortgage of £200,000, their fee would be £2,000.

Some mortgage brokers charge an upfront fee which can vary heavily depending on the experience and skill of the broker and the complexity of your case.

 A typical charge for an upfront fee might range between £250 and £500. Once a mortgage agreement has been successfully offered, you might be charged a further payment. as a success fee, again this could be fixed or percentage fee.

How are mortgage advisors paid and do I pay them directly?

If a broker fee is added to a mortgage (in the case of a remortgage) the broker’s fee is paid to your lender and then this is transferred to the broker along with their commision.

For upfront or success fees’ they are typically transferred directly to the advisors company, this should be set out in writing. Any queries regarding fee payment shoulds be direct to the company compliance department

Always be clear on how you pay your broker. If you feel unsure about the cost of your fee and how your broker came to that amount, ask them for a detailed breakdown.

Are there different types of mortgage brokers?

Yes there are. Some mortgage brokers have links to lenders which can make their advice biased. Because of their relationships with certain mortgage providers, they can’t compare all of the possible options that might be available to you. 

These brokers are usually referred to a tied brokers. Some brokerages are actually owned by lenders themselves, so even though they can access other lenders products you can’t guarantee it’s always the best advice. 

This is an important factor to consider when choosing a mortgage broker because working with a tied broker could limit your options and result in you missing out on a cheaper or better deal. 

Whole-of-market brokers, like the ones we work with, are independent and although they have good relationships with a range of lenders, they will always search the whole market to find the most financially beneficial mortgage for you.

How does an independent mortgage advisor get paid?

An independent mortgage advisor should have no ties to any particular lender and this is great for a customer.

Being impartial means that an independent broker will search the whole market to find the best deal, not just recommend a lender because of a commision structure.

They will then get paid a commission (or procuration fee) from the lender and if agreed a fee from yourself.

But how do independent mortgage brokers get paid if their recommendations are made solely with the customer’s need in mind?

In short, a good independent broker knows that, to succeed, they need to provide a five-star service. By consistently offering the right advice, they build a good reputation and become a trusted advisor.

This is just one of the many reasons we choose to work with independent whole-of-market brokers. In fact, we’ll only consider working with them once they’ve graduated from our official LIBF approved accreditation.

How do mortgage brokers earn their money?

An independent mortgage broker’s advice can be invaluable when searching for a mortgage.

Independent mortgage brokers have a duty to find you the best possible deal based on your individual circumstances. 

They also have a responsibility to ensure your mortgage is affordable, so any recommendation they make must be justifiable. 

To earn their money, a mortgage broker will assist you with:

  • Calculating your affordability and finding the right mortgage to suit your budget.
  • Comparing the whole of market to save you money and truly find you the best deal.
  • Researching lenders before you apply for a mortgage and make you aware of all the pros and cons you should consider.
  • Filling out and overseeing applications on your behalf to save you time.
  • Reading the terms and conditions of your mortgage agreement and highlight any points that could be unfavourable in the future.
  • Progressing your mortgage from start to finish, often working with the solicitors to complete particularly tricky cases.

Having this guidance and knowing that the advice you receive is correct and in your best interests can make the process of finding a mortgage lender a lot smoother.

Contact an advisor by calling 0808 189 2301 or make a quick enquiry to discuss the next step or to ask any questions regarding how mortgage brokers earn their money.

Do mortgage brokers lend money?

No, a mortgage broker is not a lender and therefore they do not fund loans. Think of a broker as a mortgage expert whose knowledge helps you to find the best lenders and rates on the market.

Although a mortgage broker will know the current rates and conditions of numerous lenders, they do not lend money themselves.

Talk to an expert mortgage broker free of charge and without obligation

We’ve helped over 98,000 customers get the right advice, often where previously brokers have failed. We’ll find the right broker for you – fast, simple and free.

If you’re considering buying a property, contact us today. Based on your needs and circumstances, we can recommend a whole of market broker to assist you with your search for a mortgage. 

Take a couple of minutes to fill in our enquiry form or call 0808 189 2301, then just sit back and let us do all the hard work.

Updated: 3rd October 2019
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.