Skip to content
Home » Paying a mortgage adviser – fees or commission?

Paying a mortgage adviser – fees or commission?

The costs of mortgage advice could vary between £400 and £500, or none at all and the mortgage broker receiving a an amount from the lending institution. Sometimes, the broker may be charged one or the other or both, and in certain cases they’ll get both a fee as well as commission.

Do you want to pay a mortgage consultant commissions or fees?

You are entitled to know prior to time the method by which your mortgage broker will be compensated. Be sure to inquire with him or her if they charge fees from you, a commission from the lender/bank or both. Also, ask them what the amount of the fee and/or commission will be. You should also be sure to confirm that any fees you pay be contingent on the mortgage being completed.

Certain mortgage brokers will allow you to decide whether they will pay fees or charge commission instead.

Commissions or fees for mortgage brokers What is the better option?

There’s no disadvantage of having an agent for mortgages paid by commission rather than fees. Brokers who are paid commissions will still be able to offer unbiased advice on the ideal mortgage option for your needs, however it is best to inquire for this information upfront. Be sure to check that your mortgage advisor isn’t tied to certain providers and is able to provide advice on all the different options.

In some cases it might be beneficial to pay an upfront cost to get the most favorable mortgage rate. It could be the case when the broker determines that the most advantageous deal you can get does not require fees (or insufficient to justify their effort). It could be that the deal is greater value for your long-term goals which will help pay off the costs of the adviser’s fees in the long run.

In the event that your lender is charging you a fee, inquire them to clarify why and you’ll ensure they are offering the best value for your money.

What commissions do mortgage brokers get?

The majority of mortgage lenders will give mortgage brokers a commission also known as a procuration charge that is approximately 0.35 percent of the loan’s value. For an unsecured mortgage of £100,000 the typical commission could be £350. There is no cost to pay for anything for this, and it won’t impact your expenses at all.

But, it’s worth finding out the commissions your broker will be paid. It is important to ensure that your mortgage broker is negotiating the best deal for you, not only for them!

What is the maximum amount the mortgage broker be charged?

The fee for a mortgage broker could range from 0.3 percent of the loan’s value and up to 1 per cent . No one should ever be expected for more. For a mortgage of an average size of £150,000 , a cost of 0.3 percent would be £450.

Be sure to confirm the fee of your mortgage broker in advance by obtaining an official quote. Also, get a written confirmation that in the event that your mortgage contract falls through, there is no cost to pay. Be aware that having an adviser to help you with your mortgage should be a way to save in the long run So, ask the adviser to explain to you why their mortgage advisor fees are justifiable.

Does a mortgage broker’s commission worth the cost?

A mortgage broker’s commission can be repaid very fast if the deal you have is even a little higher than the second most competitive offer.

As an example, suppose you borrowed £150,000 with the rate that was 2.5 percent. Your monthly payments will be £673 and you’d have to repay an amount of £201,903 in 25 years.

If your mortgage broker can increase that rate by 0.1 percent (giving you the rate of 2.4 percent) and you’d be able to pay £666 per month for an overall total of £199,694, saving you £2,209. In the event of the £500 commission from the broker, it is still £1,709, and you’d earn return the £500 fee within six years.

Be aware that this is an illustration only (actual mortgages may require renewal every couple of years) however it does illustrate that even a slight change in the rate of interest over time could lead to huge savings. In actuality an expert mortgage broker can usually beat traditional mortgages with a greater amount, which makes it worthwhile to consult with a professional each when you are remortgaging.

This is why that, even with an agent who is paid commissions it’s worthwhile asking them about better options which can be obtained at a cost.