The two ways UK mortgage brokers get paid
Every FCA-regulated UK mortgage broker earns money in one or both of these ways:
- Lender procuration fee. The lender pays the broker a commission for introducing the case — typically 0.30%–0.40% of the loan. On a £250,000 mortgage, that's £750–£1,000 paid by the lender, not you.
- Client fee. A flat or percentage charge paid by you. Common structures: flat £195–£995, or 0.5%–1% of the loan for complex cases.
Some brokers take both. The FCA requires the broker to disclose the fee, the basis of the charge, and any commission they will earn — on the Initial Disclosure Document (IDD) at first contact and in the Suitability Letter before you commit.
Typical UK broker fees in 2026
- Vanilla residential mortgage: £0 (fee-free) to £600 average.
- First-time buyer: often £0 — brokers compete hard on FTB cases.
- Buy-to-let: £495–£999 typical.
- Adverse credit / specialist: £750–£1,500.
- HMO, expat, bridging, large complex cases: £1,500–£3,000 or 1% of loan.
- Remortgage / product transfer: often £0 or a token £99–£199.
Are 'free' mortgage advisors really free?
Yes, to you. A fee-free broker is paid entirely by the lender via procuration fee. You pay nothing directly. Whether 'free' is genuinely better depends on:
- Panel. Does the broker have whole-of-market access, or only a small lender panel? Whole-of-market is what matters — not the fee.
- Commission bias. If two products are equally suitable but one pays a higher procuration fee, a small minority of brokers may lean toward the better-paying one. FCA rules forbid this but it's worth asking how the broker handles it.
- Service level. Fee-charging brokers often have more time per case. Fee-free brokers often run higher volumes and faster turnaround.
When should the fee actually get paid?
The fairest fee structures, in order:
- Fee on completion. You only pay if the mortgage actually completes. Best for the borrower.
- Fee on offer. Pay when the lender issues a formal mortgage offer. Reasonable.
- Fee on application. Pay when the application is submitted. Risky if the case is borderline — you can lose the fee on decline.
- Fee upfront. Generally avoid for amounts above £200, unless the case is genuinely complex and the broker is doing significant prep work.
What does a mortgage broker actually do for the fee?
- Fact-find and credit profile review (1–2 hours).
- Whole-of-market product sourcing against your criteria.
- Affordability calculations against each lender's specific rules.
- Mortgage in Principle (MIP) submission.
- Document collection, packaging and submission to the lender.
- Chasing underwriting, valuation and offer.
- Coordinating with your conveyancer through completion.
- Protection review (life cover, income protection, buildings insurance).
A standard residential case typically takes 8–15 hours of broker time. A complex case can run to 30–40+ hours.
Red flags when a broker discusses fees
- No written IDD before the conversation gets serious.
- Fee charged upfront with no refund clause.
- Vague answer on procuration fees received.
- Pressure to commit before you've seen product comparisons.
- Recommending a single lender without explaining why others were ruled out.
Pros
- Fee-free brokers cost you nothing directly.
- Fee-charging brokers often have more time and complex-case expertise.
- FCA rules require written fee disclosure upfront.
- Procuration fees are standardised across the market.
- Fee on completion structures protect you if the case fails.
Cons
- Fee-free brokers sometimes have narrower panels.
- Fee-charging brokers add a real cost on top of the mortgage.
- Some brokers charge upfront non-refundable fees.
- Procuration fee structures can introduce subtle commission bias.
- Complex specialist cases (adverse, expat, HMO) routinely cost £1,500+.