Question 1

How do mortgage brokers earn their money?

Accepted Answer

Mortgage brokers earn money through two main mechanisms, which are not mutually exclusive. The first is a procuration fee paid by the lender when a mortgage completes. This is a commission paid by the lender in exchange for introducing the borrower — the broker does not typically receive this payment until the mortgage has exchanged and completed. The second is an advice fee charged directly to the client. This may be a flat fee or, less commonly, a percentage of the loan amount. Some brokers rely entirely on procuration fees from lenders and charge nothing to clients (fee-free brokers). Others charge a client fee in addition to receiving a procuration fee. Others charge a client fee in lieu of a procuration fee, passing the procuration fee back to the client or to a charity. FCA rules require brokers to disclose how they are remunerated before providing advice, so you should always be told upfront what the total cost of using a broker will be before you commit.

Question 2

What is a procuration fee?

Accepted Answer

A procuration fee — also called a proc fee — is the commission a mortgage lender pays to a broker when the broker successfully introduces a borrower and a mortgage completes. It is typically calculated as a percentage of the loan amount, most commonly between 0.3% and 0.5%, though the exact figure varies between lenders. On a £250,000 mortgage, a 0.35% proc fee would amount to £875. Procuration fees are paid by the lender, not the borrower — they represent the lender's marketing and distribution cost, essentially the lender paying for the broker's work of sourcing and preparing the application. Brokers must disclose the procuration fee they receive as part of their regulatory obligations under FCA rules: this is shown in the initial disclosure document. Procuration fees do not always incentivise brokers to recommend more expensive products — the fee is typically a flat percentage regardless of rate — but borrowers should be aware that not all lenders pay the same proc fee, which is one reason why regulatory disclosure requirements exist.

Question 3

What is the difference between a fee-free broker and one that charges a fee?

Accepted Answer

A fee-free broker charges the client nothing for their advice and service, earning their income entirely from procuration fees paid by lenders when mortgages complete. A fee-charging broker charges the client an advice fee — which may be paid at application, on offer, or on completion — in addition to or instead of the procuration fee from the lender. Fee-free brokers are not necessarily worse or less thorough than fee-charging brokers; many fee-free brokers operate across the whole of market and provide excellent advice. However, fee-free brokers may be less commercially viable when cases are very complex, time-consuming, or involve lenders who pay lower proc fees or no proc fee at all — some specialist and private bank lenders do not pay procuration fees, meaning fee-free brokers cannot economically work with them. Fee-charging brokers typically cover a wider lender panel and can justify the time invested in complex cases through the client fee. For borrowers with straightforward income and credit profiles, a fee-free broker often works perfectly well. For borrowers with complex income, specialist circumstances, or unusual property types, a fee-charging specialist broker may access lenders and solutions that a fee-free model cannot.

Question 4

How much does a specialist mortgage broker typically charge?

Accepted Answer

Specialist mortgage broker fees vary considerably depending on the complexity of the case and the broker's specific charging model. For straightforward cases handled by a specialist firm, fees of £500 to £750 are common. For complex income cases — such as self-employed borrowers, limited company directors, contractors, or borrowers with non-standard income structures — fees of £750 to £1,500 are typical. For highly complex or large loan cases (for example, high-net-worth individuals, bridging or commercial finance, or private bank applications), fees may be higher still, sometimes quoted as a percentage of the loan amount rather than a flat fee. Some brokers charge a smaller initial fee at application (sometimes called an engagement fee or administration fee) and a larger completion fee when the mortgage completes. Broker fees are disclosed upfront and must be set out in writing before advice is given. When assessing whether a broker fee represents value, it is worth considering the potential saving from being placed with the most appropriate lender — a specialist broker who secures a better rate or a higher income multiple may save substantially more than their fee over the mortgage term.

Question 5

Is a fee-charging mortgage broker worth it for complex income borrowers?

Accepted Answer

For many complex income borrowers, yes. The core value a specialist broker provides is knowledge of which lenders will accept which income types — and on what terms. This knowledge is not publicly available: lenders' detailed criteria for self-employed income, contractors, directors, or borrowers with multiple income streams are not published in full on any comparison site. A specialist broker who regularly places cases with a wide lender panel knows, for example, which lender will accept one year of self-employment accounts, which will include retained profits in the income calculation, which will take net profit rather than averaging income across years, and which will treat day-rate contractor income as a salary equivalent. The difference in maximum loan between the right and wrong lender for a complex income borrower can be tens of thousands of pounds. A broker fee of £999 that results in access to a lender willing to lend £50,000 more — or who will accept the application at all where others decline — represents a significant return. For straightforward income types with strong credit history and standard properties, the benefit is smaller, which is why fee-free options may be appropriate in those cases.

Question 6

Are mortgage broker fees regulated?

Accepted Answer

Yes. Mortgage brokers in the UK who provide regulated mortgage advice must be authorised by the Financial Conduct Authority (FCA). As part of this authorisation, they are subject to rules governing how they charge clients and how they disclose their fees and remuneration. Brokers are required to provide an Initial Disclosure Document (IDD) before giving advice, which states whether they charge a fee and the basis on which they are remunerated. They must also disclose the amount of any procuration fee they receive from the lender. Broker fees themselves are not capped by regulation — they are set by the market and the individual firm — but the requirement for upfront disclosure means you should always know what you will pay before you commit to using a particular broker. If a broker charges a non-refundable upfront fee, this must be clearly disclosed. Under the FCA's Consumer Duty rules (introduced in 2023), brokers are expected to demonstrate that their fees represent fair value relative to the service provided, which provides an additional layer of consumer protection beyond simple disclosure requirements.

Mortgage Broker Fee FAQ