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How do Mortgage Advisors make money?
What is the average fee a Mortgage Advisor charges?
Can I get fee free Mortgage Advice
Why do some Mortgage Advisors charge fees and some do not?
What do Mortgage Advisor fee cover?
Are Mortgage Advisor fees worth the money?
The other fees payable during the Mortgage process
How do Mortgage Advisors make money?
All Mortgage Advisors will receive commission from the Mortgage Lender.
The amount payable will almost always be a percentage of the Mortgage you take out.
Typically, the commission payable to a Mortgage Advisor is between 0.30-0.50% of the Mortgage.
This is known as a procuration fee and is paid by Mortgage Lenders to Mortgage Advisors for taking on the advice, admin and compliance/risk, meaning the Mortgage Lenders don’t have to.
The Mortgage Advisor very rarely gets the full percentage mentioned above, as typically they will be part of a Network/Club or Company who will take their cut, before paying the Advisor.
This is why Mortgage Advisors usually then charge a fee in addition.
If the commission didn’t exist all Mortgage Advisors would simply need to charge higher fees than what they currently do.
What is the average fee a Mortgage Advisor charges?
It really does depend on a number of factors including the size of the Mortgage, whether you have previous adverse credit, and the complexity of your case. For example, if you’re Self Employed, or buying a non-standard Constructed property.
But from our experience, we find typical fees range between £195-£499.
And for more complex cases, such as adverse credit, the typical fee could be up to £1,000.
Even with adverse credit though, I would never suggest going with a Mortgage Advisor charging more than this, although this does often still happen.
The chances are they’ll be no better, and no more experienced than an Advisor charging £495.
Can I get fee free Mortgage Advice?
Yes, absolutely. And if that is your main priority, there are plenty of fee free advisors out there.
Typically they will be large national Mortgage Brokers, who complete a large volumes of sales to make it worth their while.
But there is a reason why fee charging Brokers still exist. And that’s because typically they will offer something different.
Whether that’s a direct line to them throughout the whole process, a more personalised service, knowledge on the local area, a quicker service etc…
What do Mortgage Advisor Fees cover?
Simply put, a Mortgage Advisors fee helps cover their and their admins/PA’s time/wages.
They then receive commission from the Mortgage Lender they recommend which tops up their earnings to a sustainable level.
As mentioned above, there are great fee free as well as fee charging Mortgage Advisors out there, but usually somethings got to give when an advisor is completely fee free otherwise fee charging advisor wouldn’t exist.
Are Mortgage Advisor fees worth the money?
That depends on the fee they charge and the service they offer.
One of the most frustrating parts of buying a property is waiting.
You have to wait for the Mortgage Lender to make a decision, then wait for the Solicitors to process their documents.
Having an attentive Mortgage Advisor who answers your calls and responds to your emails quickly, for the sake of a few hundred quid, is completely worth it to most.
The other fees payable during the Mortgage process
We’ve already discussed the Mortgage Advisors fees at length, but what about other costs?
Well there’s the Solicitors costs and fee, which typically costs £1,500-£2,500 for a purchase.
The Mortgage Lender may charge an arrangement/product fee, typically £999. This can usually be added to the Mortgage to help cut initial costs.
Some Lenders charge a property valuation fee which typically costs £100-£300. But will cost more if you have adverse credit or a complex case.
Estate agents fees (if you’re selling a property), typically 1% of the sale price.
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