How Do Mortgage Brokers Get Paid UK? Slough Guide

Most mortgage brokers are paid a commission by the lender once your mortgage completes. Some brokers also charge you a fee on top of that. Either way, a broker must tell you clearly how mortgage brokers get paid before you agree to work with them.

In short:

• Brokers are usually paid commission by the lender, a client fee, or both
• Commission comes from the lender’s own margin, not your loan or monthly payments
• Some brokers charge nothing at all and rely only on lender commission
• A fee paid on completion carries far less risk to you than one paid upfront
• FCA rules mean a broker must recommend what suits you, not what pays them most

If you want to know exactly how mortgage brokers get paid, and what to ask before you commit to one, this guide covers it properly.

Understanding how mortgage brokers get paid matters because it affects how much you can trust their advice. A broker and a mortgage adviser mean the same thing. If you are still getting to grips with the basics, our guide on what a mortgage broker actually does is a good place to start. The lender’s payment to a broker is called a procuration fee, paid once your mortgage completes.

Mortgage brokers in the UK are regulated by the Financial Conduct Authority, or FCA. This means they must recommend a mortgage that suits your circumstances, not simply the one that pays them the most. How a broker is paid should be explained to you clearly from the start.

How mortgage brokers get paid: the two main sources

There are two possible income sources for a broker. Some use one, some use both.

The first is lender commission, sometimes called a procuration fee. When your mortgage completes, the lender pays the broker directly for arranging it. This comes out of the lender’s own margin, not your pocket, and it does not change your interest rate.

The second is a client fee. Some brokers charge you directly for their advice and the work involved. Others charge nothing to you personally, and rely only on the lender’s commission instead.

What does a mortgage broker fee actually look like?

There is no fixed rate set across the industry, so fees vary from broker to broker. A flat fee is a set amount agreed upfront, and it stays the same no matter how much you borrow. A percentage fee grows with the size of your mortgage instead, often somewhere in the range of 0.3% to 1% of the loan. A fee-free broker charges you nothing directly, earning only through the lender’s commission.

These figures are illustrative examples only, not fixed prices you should expect to be quoted, since every broker sets its own charges. Complex cases, such as poor credit or unusual income, sometimes carry a higher fee, simply because they take more work to place correctly.

When do you actually pay a broker’s fee?

Timing matters almost as much as the amount, because how mortgage brokers get paid over time changes how much risk sits with you.

Some brokers ask for payment upfront, sometimes before you even have a mortgage offer. If your case falls through, you may not get this back. Others charge only once the lender has formally issued your offer. Some charge only once your mortgage has fully completed, which carries the lowest risk to you, since payment is tied to a successful outcome.

Generally, the later a fee falls due, the better it tends to be for you. If a broker wants a non refundable fee upfront, it is a fair question to ask why.

Is a fee-free broker automatically the cheaper option?

Not necessarily. A broker’s fee is usually a one-off cost of a few hundred pounds. Your mortgage runs for years, and the gap between a well-matched deal and a poorly-matched one can be worth far more than any fee.

If a fee-charging broker finds you a better-suited deal, or gets a tricky case approved that a fee-free service might turn away, the fee can pay for itself many times over. The fee is the small number here. The mortgage you end up with is the big one. It is worth judging a broker on that, not just on whether they charge anything at all.

Here is what that can look like in practice, using a £200,000 mortgage over 25 years as an example.

Monthly repayment	£1,112	£1,100
Total repaid over 25 years	£333,500	£330,100
Saving from a 0.1% lower rate		£3,400

Even after a broker fee of a few hundred pounds, you would still come out ahead, often within the first couple of years. This is only an illustrative example, since real rates and terms vary, but it shows how a small difference in rate can matter far more than the size of the fee itself.

What is “double dipping,” and is it allowed?

Some brokers charge you a client fee and also receive commission from the lender on the same mortgage. This is sometimes called double dipping.

It is not automatically wrong. What matters is that it must be clearly disclosed to you upfront, in writing, so you understand exactly how your broker is paid before deciding if their service is worth it.

Do mortgage brokers lend you the money themselves?

No, they do not. A broker’s role is to arrange your mortgage, not to lend the money or hold the funds. The lender you are matched with provides the mortgage and takes on the lending risk, not the broker. If you are still weighing up whether to use one at all, our guide on why use a broker instead of your bank covers that decision properly.

What should you ask before agreeing to anything?

Before you commit to a broker, it is worth asking how they are paid, whether that is commission, a fee, or both. If there is a fee, ask exactly how much, and whether it is refundable if your mortgage does not complete. Ask when the fee falls due, whether that is upfront, on offer, or on completion. And ask to see it all in writing before any work begins.

A broker who cannot answer these clearly, or seems reluctant to put anything in writing, is one worth being cautious about. Once you are happy with how a broker is paid, the next thing worth understanding is how long a mortgage application actually takes, so you know what to expect once you get started.

Choosing a broker in Slough

Whatever arrangement a broker uses, the same standard should apply wherever you are buying. At “Cubic Financial Services – Mortgage broker”, we are based in Slough, and we explain how we are paid before you commit to anything. Get in touch for a free, no obligation chat about your situation.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Frequently Asked Questions.