The role of mortgage brokers in the home buying process

Before we tackle the thorny question of fees, let’s take a step back. What exactly does a mortgage broker do? In simple terms, they act as the middleman between you (the borrower) and the lender. Their job is to search through countless mortgage products, compare interest rates, and find the best deal tailored to your personal circumstances. Think of them as your personal mortgage matchmaker—minus the awkward first date!

A good mortgage broker will:

• Assess your financial situation and mortgage needs
• Search the whole market for the most suitable deals
• Guide you through the application process
• Liaise with lenders on your behalf
• Help you understand the fine print (because let’s face it, no one enjoys reading pages of jargon)!

Sounds great, right? But what’s the catch? Let’s find out.

Understanding mortgage broker fees

Here’s where things get interesting. Mortgage brokers need to earn a living, but how they get paid varies. A lot of mortgage brokers charge their clients a fee on top of the fee they get from the lender, while others (like us at Save On Mortgages) feel the fee they receive from the lender is sufficient. The key thing to understand is that mortgage brokers don’t work for free—but that doesn’t necessarily mean you, as the borrower, have to foot an additional bill.

Brokers typically get paid in one of three ways:

1. Lender commission – the lender pays the broker a commission when your mortgage is completed.
2. Client fees – the broker charges you directly for their services (either upfront or upon mortgage approval).
3. A combination of both – some brokers charge both a lender commission and a client fee.

At Save On Mortgages, we’re proudly fee free. Like all brokers, we’re paid a commission by the lender once a mortgage completes—but unlike many others, we don’t add an extra fee for our clients. So, you get expert mortgage advice without it costing you a penny.

Types of fees charged by mortgage brokers

For those who do charge fees, the costs can vary significantly. Here are the most common types:

• Fixed fee – a set amount charged for their service, regardless of the mortgage size
• Percentage fee – a percentage of the loan amount (e.g., 1% of a £200,000 mortgage would be £2,000)
• Hourly rate – some brokers charge by the hour, though this is less common
• Retainer fee – an upfront cost to secure the broker’s services.

If you’re working with a broker who charges a fee, always clarify how much and when it’s due before signing anything.

Factors influencing mortgage broker fees

Why do some brokers charge fees while others don’t? A few factors come into play:

• The broker’s business model – some brokers rely solely on lender commissions, while others prefer charging clients directly for a perceived higher level of service
• Mortgage complexity – if your situation is more complex (e.g., self-employed, bad credit, unusual property), some brokers might charge a fee for the extra work involved
• Market conditions – In highly competitive markets, some brokers may waive fees to attract more clients.

Pros and cons of working with a fee charging mortgage broker

So, is paying a fee for a mortgage broker worth it? Here’s the breakdown:

Pros:

• May have access to exclusive mortgage deals
• Could offer more in-depth financial advice
• Might provide more hands-on service, particularly for complex cases.

Cons:

• Adds to your upfront home buying costs.
• Doesn’t necessarily guarantee a better mortgage deal
• Can be avoided by choosing a fee free mortgage broker (like us)!

How to negotiate or avoid mortgage broker fees

Want to avoid unnecessary fees? Here are a few tips:

• Shop around – compare different brokers and their fee structures
• Ask questions – make sure you understand exactly what you’re being charged for
• Look for fee free brokers – like Save On Mortgages, where you won’t pay a penny
• Negotiate – if a broker charges a fee, ask if they’ll lower or waive it.

Common misconceptions about mortgage broker fees

Let’s bust a few myths while we’re at it:

• “All mortgage brokers charge fees” – nope! Many are fee free (like us)!
• “Fee charging brokers get better deals” – not necessarily. The best brokers find great deals regardless of whether they charge fees
• “Mortgage brokers work for the lender” – a good broker works for YOU, not the bank, not the building society or other lender.

In the UK the Financial Conduct Authority (FCA) regulates mortgage brokers to ensure they act in the best interests of YOU, the consumer. You can check if a mortgage broker is regulated using the FCA register which you can find here, (our reference number is 301774), learn more...

Alternatives to using a mortgage broker

Not keen on using a broker? Here are your alternatives:

• Go Direct to a Lender – you can approach banks and building societies yourself, but you may miss out on deals only available through brokers
• Use online mortgage comparison tools – these can give you an idea of what’s available, but they won’t offer personalised advice
• Work with a fee free broker – like us! Get expert advice without the extra cost.

Conclusion and key takeaways

Understanding  mortgage broker fees doesn’t have to be complicated. Here’s what you need to remember:

• Mortgage brokers play a crucial role in finding the right mortgage deal
• Some brokers charge fees, while others (like us at Save On Mortgages) are completely fee free
• Brokers who charge fees may do so in different ways—fixed fees, percentage-based fees, or hourly rates
• You can avoid mortgage broker fees by choosing a broker who only takes commission from lenders
• Always read the small  print and ask about fees before committing.

At Save On Mortgages, we believe in being transparent, open and—most importantly—helping you secure the best mortgage deal without paying unnecessary fees. So, if you’re looking for a knowledgeable, friendly, and fee free mortgage broker serving the whole of the UK, you know where to find us!

Now that you’ve cracked the code on mortgage broker fees, you can confidently move forward in your home buying journey. All that's left for us to do is wish you happy house hunting!