Last reviewed: June 2026
TL;DR- Mortgage brokers earn money through lender commission (procuration fee, typically 0.3-0.5% of the loan), borrower fees, or both - all must be disclosed in writing before advice is given.
- Fee-free brokers earn only lender commission and charge the borrower nothing directly - this does not mean advice is unbiased, but FCA rules require suitable recommendations regardless of remuneration.
- Broker fees range from £299 to £1,500+ for standard residential cases; specialist or complex cases may be higher.
- The FCA requires brokers to disclose the exact commission amount and any fees before giving advice - ask for the Initial Disclosure Document.
How Mortgage Brokers Are Paid
Mortgage brokers receive remuneration in three possible ways:
- Lender commission (procuration fee): paid by the lender on completion of each mortgage, typically 0.3-0.5% of the loan amount. On a £200,000 mortgage, 0.35% commission = £700. The borrower does not pay this directly - the lender pays it. However, the commission is funded indirectly through the lender's margin on the mortgage rate.
- Broker fee from the borrower: a direct charge to the borrower for the advice and service provided. This may be a fixed fee (typically £299-£1,500 for standard residential cases), a percentage of the loan (typically 0.5-1%), or staged fees payable at application, offer and completion. Specialist cases (adverse credit, commercial, complex income) typically command higher fees.
- Both: some brokers charge the borrower a fee and also retain lender commission. This must be fully disclosed.
FCA Disclosure Requirements
FCA rules require all mortgage brokers to disclose their remuneration in writing before providing advice. The Initial Disclosure Document (IDD) must state: the broker's market coverage (whole of market, multi-tied or tied); how the broker is remunerated (commission, fee or both); and the specific amounts where known. The ESIS (European Standardised Information Sheet) also discloses the commission amount. Borrowers should ask for and read the IDD before proceeding with any broker.
Fee-Free vs Fee-Charging Brokers
Fee-free brokers earn lender commission only and charge the borrower nothing directly. Fee-charging brokers charge the borrower directly (and may also retain commission). Neither model is inherently superior from a quality or bias perspective - FCA rules require all brokers to make suitable recommendations regardless of their remuneration model. In practice: fee-free brokers may be more accessible for borrowers with limited upfront funds; fee-charging brokers may provide more intensive service, particularly for complex cases where the advice adds significant value and the commission alone may not adequately compensate for the time involved.
When Broker Fees Are Worth It
A broker fee of £500-£1,000 is worth paying where: the broker accesses products not available direct that save more than the fee in total interest; the case is complex enough (adverse credit, specialist property, non-standard income) that the broker's expertise and lender relationships prevent a decline or access a meaningfully better rate; or the borrower values the time saved and service provided. Comparing the total cost of using a fee-charging whole-of-market broker against a fee-free broker or going direct (with potentially less product access) is the relevant analysis.
Frequently Asked Questions
Is a fee-free mortgage broker as good as one who charges?
FCA conduct rules require all mortgage advisers to make suitable recommendations regardless of whether they charge a fee. Fee-free and fee-charging brokers are subject to the same regulatory requirements. In practice, fee-free brokers typically work at volume and may be appropriate for straightforward cases. Fee-charging specialists may invest more time in complex applications where the outcome is harder to achieve. Neither model is universally superior - the quality of the specific firm and adviser is what matters most.
Can I negotiate mortgage broker fees?
Some brokers are willing to negotiate their fees, particularly for repeat business, larger loan sizes (where commission is higher) or referral relationships. There is no harm in asking whether the fee is fixed or negotiable. Fee reductions are more common where the case is relatively straightforward and the lender commission will be high, reducing the broker's reliance on a borrower fee.
When is the broker fee payable?
This varies by broker. Some charge the full fee at application; others stage it (part at application, part at offer, part at completion). Some only charge on success (at mortgage offer or completion). The payment terms should be confirmed before instructing the broker - a fee payable at application regardless of outcome is riskier for the borrower than a success-only fee. Borrowers should also confirm the refund policy if the case does not proceed to mortgage offer.
Does the lender commission amount affect the recommendation I receive?
FCA rules require brokers to make suitable recommendations for the client's circumstances regardless of the commission payable by different lenders. Brokers must not recommend a product primarily because it pays higher commission if a more suitable (and potentially lower-commission) product is available. In practice, lender commission rates are fairly standardised across mainstream lenders, reducing the potential for bias. For borrowers who want extra assurance, asking the broker to confirm that commission levels did not influence the recommendation is reasonable.
