Mortgage broker fee

[Skinnyjeansandaloosetop]

I am looking to remortgage a year early for various reasons and will be having to pay the ERC at 1%, which will be £2,500. I have found a mortgage broker who have been highly recommended but their flat fee is £1,000 (which will be about 3% of our new mortgage). I don’t know if it’s worth going to a broker where you pay a fee or if I should look to find one that just gets commission from the bank/ building society? Am I likely to get a better deal / wider choice with a broker that I pay a fee to? If so does the fee sound reasonable? It’s a £295 deposit, refundable if you don’t get offered a mortgage, and the balance payable on completion. Any experiences much appreciated!

I always thought mortgage brokers didn’t take a fee from the client because they made their commission from the mortgage provider.

No - they take a fee and in my experience are much more proactive than non fee paying ones. They do also take a fee from the lender. Our current broker is £500 and worth every Penny and more!

Our current broker fee is £199

Hmmm, I think I would be paying too much then!

We’ve used London and country twice to remortgage at the end of fixed terms, and they’re free. They’ve offered us great service and I’d def recommend.

I’d also thoroughly recommend London and Country. No fee and really good service.

If you're only looking to borrow £30-35k, it's almost certainly not worth paying a broker £1k to find a new mortgage for you.

It's only generally worth paying these days if you are a specialist case, eg poor credit history, self employed or other income complexities or you need to stretch affordability so would need access to specialist knowledge or broker only products as you need more than what you can get yourself by going direct, searching money supermarket or one of the large free brokers.

For a tiny mortgage it's unlikely to make sense. What's the circumstances? You're talking about paying over 10% in fees here to remortgage a year early. For that to make sense, you'd need quite unusual or desperate circumstances, so I'd explore all other options first. Can you avoid the early repayment charge by getting a new mortgage for further borrowing from your existing lender for example?

Is your case particularly complicated? If not, I wouldn't pay a fee, certainly not £1000. Organising a straightforward mortgage isn't rocket science and the days of brokers getting access to special fees are long gone. Speak to your bank, have a look on comparison sites, see what fees are out there and do it directly, I would. Or find a whole of market broker that takes the fee from the lender.

Our broker chargers between £250 and £400. Worth every penny.

London and Country have been used for a new mortgage and remortgage. No fee to pay and they are a whole of market broker. Why pay for it when you can get it free!

We paid £200 for ours. Independent one. She was great gave her our info said we like to be paying around this much a month. Got it all sorted for us. All paperwork ect. Would recommend. She was quick too. Chasing the banks around to get our offer in quicker ect. I have no photo ID either and she knew what to do about that too.

L&C are by far the best mortgage brokers IMO and they’re free.

Ours is £250 and really good.

Ours was £500, he was bloody amazing! His fee came from the mortgage company. Honestly though, this guy was a wizard!

We have a high ‘debt to income’ ratio and are looking to consolidate our debts into the mortgage. We were looking at a second charge loan but the cost of that was too ££ for me to swallow so we decided to remortgage early. So I want to make sure we get a good deal. I’m trying to get our debts down, so adding another grand on, I’m reticent to do - but I also want to make sure we get a good deal 🤷‍♀️ It’s a 300k mortgage, so essentially 3%

I had an awful credit rating and L&C worked their magic and got us a brilliant deal. I can't recommend them enough.

Oh, if it's a £300k mortgage, its 0.3% not 3% and makes a huge difference as to whether it might be worth doing.

(Obligatory warning: debt consolidation should be regarded very much as a one off act of desperation so you don't end up in the position that lots of people do with more debt alongside their new bigger mortgage so must be done in conjunction with strict budgeting and iron will against taking on more debt ).

But I'd definitely look at a free or cheaper broker or see if you can negotiate the fee with this one, you have nothing to lose (ignore all the dire warnings of 'if you apply and get rejected you've ruined your credit rating and won't ever be accepted for anything again, it's bollocks).

We used an independent broker when we were first buying as our circumstances were potentially tricky (combo of self-employed and employee earning, not enough records for 5+ years self-employed, short-term contracts etc) and they were worth every penny of the £400. We used them again to remortgage even though our circumstances are now much more ‘standard’ and they discounted the fee and we got a great mortgage deal. So I’d happily use them again, even though I think we could probably have saved by just DIY route, but it was so easy to use them that it was worth it for the lack of stress!

In your circumstances £1,000 sounds massive to a broker, when you’ll also need to pay ERC and potentially a new arrangement fee, and it’s a hefty mortgage already. I’d speak to L&C to see what they could do before committing that amount. If after that you want to go ahead then you could query it with the broker & they may reduce the fee - they need cash flow as much as anyone else does.

And yes, as Barbara says it’s 0.3% and you need to know why you’ve got a huge debt to income ratio and work towards making sure that is sorted. You’ll be paying more overall on your debts over a longer term so it’s crucial to have a plan!

but I also want to make sure we get a good deal

You don't need a broker to do that, as I say long gone are the days where they have access to cheaper rates, they can just know where to look particularly if your case is a little less standard, maybe start with somewhere like L&C where you don't get charged.

Oh yes, clearly not 3%!!
Thanks everyone- it sounds too steep from what people say. I will try L&C in the first instance

I don’t know why everyone raves about L&C. I waited weeks for an appointment with them only to be told they couldn’t help and no one would offer me a mortgage. Went to another broker (cost £395) got approved for a mortgage last week.

I agree Nelle. I can't remember if it was L&C or John Charcol, the other big free broker, but whoever it was completely ignored what I'd asked for in terms of a mortgage, recommended a totally different product and was quite rude when I politely explained why I wouldn't be going forward with their recommendation.

So I found my own mortgage directly with the lender and it's paid off massively because I still have the same product over a decade later and am currently paying 0.5% annual interest.

I work for an independent whole of market broker who do not charge a fee. Sadly we don't have the marketing budget of L&C.

I would say you absolutely don't need to pay a fee for mortgage advice, but as with all things there is good and bad in all, a hundred people can get good service from someone then 1 doesn't, thats the nature of life and we would always advocate a client speaking to a couple of brokers to get a feel for who you want to use, this is the biggest purchase/commitment you will likely ever make you want to get it right! At any one time we will be speaking to a handful of clients unhappy with L&C, but compared to the numbers they must do its probably a very small percentage.

All brokers receive a % commission from the lender too, whether a broker charges you a fee or not.