The three mortgage broker fee structures
1. Fee-free (commission only)
Many mortgage brokers in the UK charge nothing directly to the client. Instead, they earn a commission (called a "procuration fee") from the lender when your mortgage completes — typically 0.35–0.5% of the loan amount. On a £250,000 mortgage, that's £875–£1,250 paid by the lender to the broker, not by you.
Importantly, FCA regulations require brokers to recommend the most suitable product for you regardless of how much commission they earn. There's no regulatory reason why a fee-free broker gives worse advice than a fee-charging one.
2. Flat fee
Some brokers charge a flat fee for their service, typically £300–£500 for a standard residential mortgage, higher for more complex cases (£500–£1,500 for specialist cases like bad credit, large loans, or complex self-employment). They may also receive a reduced commission from the lender on top of this.
3. Percentage fee
Less common, but some brokers charge a percentage of the loan value — typically 0.3–0.5%. On a £500,000 mortgage, this could be £1,500–£2,500. This structure is more common for specialist or high-value cases where significant additional work is involved.
When do you pay?
For fee-charging brokers, most charge at mortgage offer stage (after the lender has approved your application). Some charge a small upfront booking fee (£100–£200), refundable or non-refundable depending on the broker. Always ask when the fee is payable and under what circumstances it's refunded if the application doesn't complete.
Is it worth paying a broker fee?
In almost all cases, yes — even if the broker charges a fee. Consider the maths: if a broker finds you a rate 0.2% lower than you'd have found yourself on a £300,000 mortgage over 25 years, the saving is roughly £600 per year, or £15,000 over the term. A £500 broker fee is easily justified.
Beyond rate, a good broker also saves you time, handles all the paperwork, avoids declined applications (which damage your credit score), and often secures approval when going direct would have resulted in a decline.
What to ask about fees before starting
- "Do you charge a fee, and how much?"
- "When is the fee payable?"
- "Is the fee refundable if my application is declined?"
- "Do you also receive commission from the lender?"
- "What's included in the fee?"
The bottom line
Many of the best mortgage brokers in the UK are completely free to use. Even those who charge a fee almost always deliver value that exceeds the cost. Nesto matches you with FCA-regulated, whole-of-market brokers for free — and you can ask them about their fee structure in your initial consultation before committing to anything.