Searching for a competitive mortgage through a broker inevitably raises questions of additional fees, charges and commissions. Every mortgage broker on the market imposes a charge for the services they provide, though fee structures and payment policies vary significantly from one broker to the next.
Fees from one broker to the next will vary and there are brokers who offer their services 100% free of charge for borrowers. Instead, their payment is collected from the lender when the loan agreement is finalised.
Some of the most common ways mortgage brokers impose fees and charges include the following:
- Fixed Fees – The broker charges a set fee for finding the ideal lender and mortgage for the customer, which should be fixed and not subject to change later.
- Hourly Rates – It is relatively rare for mortgage brokers to charge on an hourly basis, as doing so can cause concerns as to approximate overall fees.
- Commissions – This usually means that the broker doesn’t charge the applicant a pennybut is instead paid by the lender when they successfully refer a borrower.
- Percentage – The broker’s fee is calculated by way of a percentage of the mortgage loan and is usually charged to the borrower.
Not all brokers make their fee structures as clear as they should, which is why it is important to ensure you understand all potential charges before proceeding.
If unsure, ask your broker directly how much you can expect to pay for their services and ensure you are happy with the agreed fee.
You should also be careful when paying upfront fees which are not refundable and choosing the cheapest broker. If a company is offering to work for a small amount, you should ask yourself why.