How much do mortgage advisors charge?

How much do mortgage advisors charge?

This page was last updated in July 2022. 

How much do mortgage advisors charge?

Some people are put off of using a mortgage advisor because of their fees. Buying a house already costs enough, right? 

The thing is, a mortgage advisor’s tips and assistance can ultimately save you money in the long term. So, don’t rule out using one immediately. 

While there might be free advisors out there, they are often tied to a lender. This means the broker gets commission for advertising certain deals to you. So, a free broker might not be shopping the whole market, which means you might end up paying more than you need to. 

Below we talk about mortgage advisor charges, and explain what you can get out of an advice service. There are different types of brokers, which we explain in the article. We also discuss the other fees you might need to budget for when getting a mortgage.

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How much should a mortgage advisor charge?

It is possible to find a free mortgage advisor. However, this might not be the wisest choice. 

An independent mortgage broker will normally charge a fee. This fee will be a set percentage of the mortgage amount. So, the exact cost depends on the value of the property you are buying.

Mortgage advisers offer options between 0.4% and 1%. The exact amount mortgage brokers charge varies, but it is rare for them to not charge a fee if they are independent.

When looking for the best mortgage broker fees, make sure brokers are not asking for a fee that is higher than 1% of your mortgage. If they are, you can probably find a better rate by looking elsewhere. 

Here is a short video about mortgage advisor fees that you might find useful.

Should I pay for a mortgage advisor?

Fees for mortgage brokers can be off-putting. A mortgage is an expensive financial product, and often buyers want to save as much money as possible. This might limit their options when it comes to using a mortgage broker. 

However, an adviser can help you save money in the long term. Furthermore, they can save you a lot of time when it comes to applying for a mortgage. If you need to get a mortgage quickly, to avoid losing out on the house you want to buy, this can be invaluable.

How can a mortgage broker help me?

There are many ways mortgage brokers can make buying a house easier and cheaper. Firstly, a broker can help you decide on the type of mortgage you need (e.g. buy to let, interest free, etc.). 

Once you have chosen the type, they can help you find the best interest rate available. They will help you balance the mortgage term with the interest charge, to get it right for you. 

Finally, they will help you with your application. They will check you submit sufficient evidence to the lender, and that the form is filled out correctly. Their assistance is particularly useful if you are self-employed, as then it can be harder to prove your financial security. 

Often, buyers are part of a property chain. If you have errors in your application, it might be rejected. Ultimately, this can slow down moving home for everyone in the chain. In a worst case scenario, you could end up having your sale fall through. A broker can help you avoid this.

"A mortgage advisor, or mortgage broker, gives advice on all aspects of your mortgage. They search the market to get you the top interest rates and best mortgage lender. They can also help with the application process."

Is a financial advisor the same as a mortgage advisor?

A mortgage advisor, or mortgage broker, gives advice on all aspects of your mortgage. They search the market to get you the top interest rates and best mortgage lender. They can also help with the application process. 

A financial adviser, on the other hand, simply gives advice on the financial aspect of your mortgage. Their service looks at your wider financial picture. It will include your mortgage, but won’t be exclusive to it. Their mortgage advice may be less detailed than that of a broker.

For example, they consider all of your current and future finances to see whether you are likely to be able to afford repayments on your mortgage. However, they do this alongside other things such as assessing whether you need life insurance, and giving investment advice. 

One of the most common reasons people are declined mortgages is due to a poor credit score. If this happens to you, a financial advisor can help you turn things around. They will be able to advise you on debts such as credit cards, to improve your credit score. 

So, when navigating the complicated market of mortgage lenders, a mortgage broker can give specialist advice on mortgages. This can be used in conjunction with a financial adviser whose financial advice can help you plan in the long term. 

free mortgage broker

Can you get free mortgage advice?

Yes, some companies will not charge you a fee. This is generally because the lender is covering the mortgage broker fees instead. 

When lenders do this, they pay the fees by giving a mortgage advisor a procuration fee. This is essentially commission. While this might seem good, as you get free advice, you might not come out with the best deal. This is because the mortgage adviser is incentivised to get you to take a deal with a certain company. 

Furthermore, financial guidance may not be included with free mortgage advice. You might wish to combine your mortgage advice with financial advice, for example if you are a first time buyer. 

Should I pay for my mortgage advice?

Sometimes you cannot find a free mortgage broker that is suitable for you. The mortgage advisors charge might be offset by the fact you get a better mortgage offer. 

In simple terms, a fee free mortgage does not guarantee your broker is giving you the best mortgage deal. Before taking out a mortgage it is essential to consider the range of mortgage options out there, in order to get the best mortgage deal. 

This is why you should seek out advice from reliable mortgage advisers, even if this means added fees in some cases.

mortgage broker fee

What are the advantages of independent mortgage advice?

There are three types of mortgage brokers:

Tied Mortgage brokers

A tied mortgage broker only helps with finding a mortgage from one lender. The mortgage broker is ‘tied’ to the service of this lender. They often get commission from the lender. 

Multi-tied mortgage brokers

These mortgage brokers can offer you mortgage products from a range of lenders, though still only a limited few. 

Independent Mortgage Brokers

An independent mortgage broker can access the ‘whole of market’. Often, this results in buyers getting the best mortgage deals, as advisers can shop around for you. 

So, whilst an independent mortgage adviser might come with additional costs, they can help you make a saving in the long-term. This is because the adviser will have more choice when it comes to finding the lender that offers the best mortgage amount for the lowest costs. 

How do mortgages brokers make money?

When mortgage advice is offered without fees, mortgage advisors often charge the lender the mortgage broker fee instead. 

This is because, in the case of tied and multi-tied brokers, they have a deal. The lender pays the mortgage broker a procuration fee. This then means the broker will encourage customers to get a loan from then. 

Other advisers use the money from your broker fee to cover advice costs.

How can I find a mortgage broker?

You can find a mortgage broker online. This is true for both online mortgage brokers, and those that give mortgages advice in person. 

Remember that if you are self-employed the broker will likely need more detailed and extensive evidence of your income. So, if you want the process to be efficient, have this evidence ready when you contact the broker. 

What other fees are involved with getting a mortgage?

When you get a mortgage, mortgage advisors are technically optional. We do strongly recommend using one, though. 

There are other charges to budget for too, in addition to mortgage broker fees. For example, you might need to pay stamp duty if your property falls over the threshold. You can use a stamp duty calculator to estimate this cost, such as this one

Another charge to be aware of is the booking fee. This is the charge for making your application. 

Once you have done this, you might also need to pay an arrangement fee. This is the charge for processing your application, e.g. for checking your credit score. 

When moving home you will also need to pay valuation fees. If you are using help to buy, there are additional legal forms to fill out. So, you need to know that this result in an extra charge, too. 

online mortgage brokers

How much do mortgage advisors charge?

There is no fixed rate when it comes to fees for advisors in the mortgage market. You will need to check the terms and conditions of the advisor you choose, to be sure of the charge. 

Generally, though, the charge is 0.35% of your loan size. When choosing an adviser, conduct a thorough search to ensure you get the best deal. Also, be sure the adviser is authorised and regulated by the financial conduct authority (FCA).

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