How are Mortgage Brokers paid?

Before engaging a mortgage broker, you might wonder how they’re paid, will the service be free or might you be charged a substantial fee?  In this article we’ll explain the typical ways brokers are paid for their services and what you should ask at the outset.


How are mortgage brokers paid?

The vast majority of mortgage lenders pay a procuration fee (commission) for each mortgage which completes. Depending on the lender and product type the amount of commission can vary. Usually the procuration fee is a percentage of the loan amount and some lenders have a minimum and maximum amount they will pay.

Your adviser may also earn commission if you take out additional products such as Life Insurance, Home Insurance or a Will etc.

It is a regulatory requirement to disclose the amount of commission received from the provider and you should see this clearly evidenced in any Mortgage or Protection Illustration and the Suitability Report or Demands & Needs letter which your adviser should supply you with when taking out a mortgage or protection product.



Why do some mortgage brokers charge a fee whilst others don’t?

Whether you’ll be charged a broker fee really depends on how the Mortgage firm is set up and how their staff are paid.

Some firms claim to offer ‘free mortgage advice’.  If you encounter a firm that says this, you should ask the following questions:

  • Are there any other fees which I’ll need to pay if I go ahead with your firm that I wouldn’t incur elsewhere?

(Sometimes ‘Administration’ or ‘Processing’ fees are charged by firms / advisers and whilst technically this means you’re paying for the processing not the advice, this is still a broker fee and should be presented to you as such)

  • Are you truly whole of market for mortgages & protection?

(If not, the firm may receive a higher commission for having a preferred ‘panel’ of product providers.  This could be at the expense of them being able to recommend the best deal for you)

  • What level of experience and qualifications do you have?

(The minimum qualification to advise on mortgages is CeMAP or equivalent, but some advisers may have additional qualifications such as Equity Release or Advanced Mortgage Advice)

  • Will I have dedicated, named adviser and support contacts throughout the process?

(If dealing with a large firm to what extent might you feel like you’re being handled by a call centre?  If dealing with a small firm or sole trader, do they have the support to look after you in a busy market, or if they go on holiday?)

  • Is there an independent website such as Google, Trustpilot or VouchedFor where I can read reviews left by previous clients?

(If an adviser can’t show you a substantial number of 5-star reviews this could point to a lack of client satisfaction or a lack of experience)


If a mortgage broker or firm does propose to charge a fee you should ask:

  • When is the fee due?

(Most firms will charge when they submit a full mortgage application or you, but some may charge earlier or later in the process)

  • In what circumstances is the fee refundable?

(A fair refund policy might be that the fee is refundable if they fail to get you a mortgage, but it’s not refundable if you pull out of the transaction once the adviser has done their work)

  • Is there an independent website such as Google, Trustpilot or VouchedFor where I can read reviews left by previous clients?

(If an adviser can’t show you a substantial number of 5-star reviews this could point to a lack of client satisfaction or a lack of experience.  Assuming there are reviews, what do they say about the fee they paid – was it ‘great value’ or ‘felt expensive’?)

Most established mortgage advisers and broker firms do charge a fee, typically £300-£600, but it could be more or less than this depending on your personal circumstances, the size of mortgage being arranged and the complexity of your requirements.

It’s important to ask for a clear explanation of the fee an adviser might charge you, and bear in mind that cheapest isn’t always best.


Do some lenders pay mortgage brokers more commission than others?

Yes, the size of the procuration fee (commission) can vary between lenders, and a few lenders don’t pay brokers any commission at all (in which case, expect the adviser to charge you a higher fee).

Using Mortgage Medics’ terms with lenders for example, if we completed a £200,000 mortgage for a residential purchase, lenders would pay the following procuration fees:

  • HSBC: £800.00
  • Halifax: £720.00
  • National Westminster Bank: £900.00

From these amounts the broker firm may also have to pay a certain percentage to third parties involved in the supply chain such us a networking and/or mortgage club, who may have negotiated the payment terms on behalf of the broker firm.

So, do brokers put more business with the firms that pay more?  Well, you’d hope not, and our position at Mortgage Medics is that we always recommend the most suitable product and lender for our clients, based on established priorities, preference and product availability.

All advisers are subject to a compliance regime which amongst other things monitors their ‘provider spread’ – how much business they put with each provider.  If a particular provider is receiving more applications than would be typically normal, this potential bias will be investigated.

The vast majority of advisers act with integrity and genuinely want the best outcome for their clients.  If they are unable to recommend the cheapest deal on the market they should explain to you why, and firms should be willing to show you the commission terms they have with all providers, on request.

Mortgage Medics’ charging structure is summarised on the home page of our website and we’re always happy to be completely transparent about how we’re paid.


If this has got you thinking, we’d be delighted to help.  Get in touch and we’ll talk you through your options, or sign up to our monthly newsletter, to keep your finger on the pulse. 


William Sproule – 24th November 2022


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