A mortgage broker can give you peace of mind in knowing the mortgage you get is recommended by an expert who knows what’s best for you. What you might not know is that you don’t actually have to pay for a broker’s help.
We’ve already talked about who brokers are, and what they do. Here, we’re going to look at how mortgage brokers get paid and how you can get their expert advice without paying fees.
The direct broker fees
Mortgage brokers make money in different ways.
By charging you a flat fee of, on average, £500* up-front.
By charging you a fee based on how much you’re borrowing. For example, if you’re borrowing £180,000 they might charge a 1% fee – which amounts to £1,800.
By charging the lender a commission for bringing them your business
The go-to payment method
You’ve probably sussed it out by now, but the commission model is great because it won’t cost you anything.
Commissions are still determined by how big the loan is, but the percentage a broker earns tends to be around 0.35 to 0.45%.
Your mortgage broker must declare how much, if anything, they’ll earn from the lender. Brokers are regulated by the Financial Conduct Authority (FCA), so they shouldn’t let the amount of commission they can earn affect their advice to you. It could cost them their licence, after all.
Double dipping, and how to avoid it
Some brokers will charge you a fee for their advice and then still take a commission from the lender when they secure you a mortgage. Some people call this ‘double dipping’.
Again, brokers who do this should tell you upfront how they make money, so you’ll know if you’re dealing with a double dipper. It’s up to you whether you think their service is worth paying for.
At Mojo Mortgages, we won’t charge you a fee for our advice. Instead, we earn money from lenders who pay us a commission when we secure your mortgage with them.
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