Is it normal for a mortgage broker to charge an up front fee?

[McSlowburn]

We are currently looking to remortgage and I had a chat today with a mortgage broker and explained our circumstances. He then emailed me a list of documents he needed to proceed, including a link to a 'FactFind form’ detailing our financial situation.

After I’d submitted the form I called him with some queries and he said he could apply to a lender for an Agreement in Principle with just the information on the form, and that the other documents were more for their own compliance purposes.

Shortly afterwards I had an email from him attaching a Decision in Principle from a lender (same as an Agreement in Principle). It’s a good rate and looks promising, but he said in order to proceed he will charge £300 now and £300 when we receive the formal mortgage offer.

This is the third time in a decade that I’ve used a broker and it’s the first time I’ve been asked to pay upfront before they will actually do anything. Does this sound suspicious?

Bump.

I am in the exact position as you and have been wondering about the upfront fee too.

I used L&C recommended by MSE.
No fees upfront or otherwise and all good so far.

Ours we used last year said we only paid them on completion of the actual mortgage application so all the searching and paper work etc was done before we'd even paid them anything

Ours charged once he had got us an offer. He will also does all our renewals for free.

I find that L&C only wanted to help with simple mortgages, and there was no follow up service. Whereas our broker proactively contacts us before the fixed rate finishes.

We paid upfront £300/£400 to our broker on purchase and again on remortgage. Had an appointment today and the upfront fee was £599 but "for life" as in if we use them again in 5 years we don't pay. I think it's a lot but it was a more premium service as said would help us find a house and negotiate on our behalf.

Sorry appointment today was a broker we haven't used before

Recently used a broker, they are free to us, but get a fee from the mortgage provider. ( Not a simple mortgage)

Not sure why you would ever choose a broker who charges you.

never paid a fee to a mortgage broker, at any stage in the process!

Ours came this week and we paid £350. We have used L&C before which was free but easier with him so have decided it is worth paying for.

Paid. £400 broker fee recently, prior to MIP. just about to exchange and they're pushing for an up sell on insurances. Put me right off!

I found L&C fine. We had defaults so it went to a more experienced person on our case.

Hi @McSlowburn both our brokers did not charge for the Agreement in Principle. The broker we did go with only charged us a fee of about £580 when we had found a flat and he found us a mortgage which we proceeded with. We only paid him once and he is now our broker for life. Our flat didn't go ahead so we will be using the broker again for another property when we find one.
Hope the info above helps.

I didn't pay for my broker to do either of my mortgages! I used Richard from The Better Mortgage Company and he spent hours on the phone with me and didn't charge me a penny. IMO any broker confident in their ability to obtain a mortgage, that knows the lender will pay them a fee, will not charge...

I had to, as needed an adverse lender
They got me a mortgage when nobody else could and yes the fee was high! I paid around £1900

If you are happy to limit yourself to lenders who will give the broker a backhander you won’t have to pay.

If the cheapest deal for you won’t come with a backhander for the broker do you think they will be likely to recommend it for you if they don’t then get paid?

I would say yes. More so for the upfront fee and sometimes a completion fee. You have to remember that the advisor gets paid a very small % from the lender once everything has completed. So if a client changes their mind once they have the offer or a couple of days before completion the advisor doesn’t get paid. There is so much work that goes into finding the best rate etc so yes you should pay an upfront cost and some advisors also charge a completion/ offer fee.

There are plenty whole of market brokers who receive a fee from the mortgage provider, as opposed to the customer.

How do you know your broker didn't see you as a fool and also receive a fee from the mortgage provider?

L&c are fab and free

What are you talking about? Backhanded? Broker's get paid procuration fees by lenders. All perfectly normal and above board. No backhanders involved and I'm pretty sure brokers don't recommend rates just because they get a fee or don't
Bottom line is OP, some charge some dont

I don’t think it’s unreasonable to ask for an up front fee. As long as it’s not stupid. Advisors only get a fee from the lender if the mortgage completes and it’s not a big fee either!! Well depends on the size of the mortgage. Do you know how many people change their mind last minute or how many purchases fall through after all the hard work has been done, would you want to do all that work for nothing?

Some charge. Some don’t.

I’ve paid a broker fee before and it was worth it because the broker did a lot of the leg work/chasing for us.

There’s nothing dodgy about a broker charging a fee upfront but if you’re not happy paying it just tell him that and go elsewhere.

It's definitely not suspicious. But I would ask if he's receiving any commission from the mortgage company on top of those fees.

Advice is never really 'free' - you are either paying a fixed fee up front or you are paying indirectly through the mortgage. Which isn't necessarily going to be cheaper - what if the mortgage company is paying your 'free' adviser a high commission and charging you a higher rate because of it?

I would always shop around myself to check rates available - and ensure any commission payments are fully disclosed.

Martin Lewis, MSE website. No fees and best mortgage for you, that you can actually be accepted for.

why are people still using mortgage brokers?

Banks offer mortgages under set rules.
Brokers may not be bound by those rules and may be able to access the same mortgage you have already been refused. It is usual to charge a fee.

we have a bit of a complex case as changing jobs etc while applying. Our broker charges 799, but I got three quotes and felt he was the most likely to get us a good deal, he seemed to really know what he was talking about and actually listen to all of our complications. They do all the legwork first to get decision in principle, and then you only pay when you are putting the full mortgage application in, and it is refundable if that doesn't lead to an offer. Though not if you don't decide to take the offer. Was also quoted 250 and 1599 by other companies.