If you're shopping around for a mortgage broker, you've probably noticed something odd: some brokers charge nothing, while others charge a few hundred pounds or more. In the UK, both fee-free and fee-charging brokers are common and regulated. They simply get paid in different ways.

This guide is for anyone buying a home or trying to understand broker pricing before they commit. It's especially useful if you're a first-time buyer and "free" sounds like it must come with a catch. We'll compare how each model works and the questions you should ask before you sign up.

In the UK mortgage market, people often use ‘broker’ and ‘adviser’ interchangeably when talking about mortgage advice, so a free mortgage adviser and a fee-free mortgage broker are describing a similar type of service.

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

Habito is a fee-free, whole-of-market broker. That means you won't pay for the advice directly, and your adviser can compare deals from a wide range of lenders rather than a limited panel.

Habito is authorised and regulated by the Financial Conduct Authority (FRN 714187).

At a glance: How the two models compare

Fee-free mortgage brokers don't charge you for advice. They earn commission from the lender when your mortgage completes. Fee-charging brokers ask you to pay a fee, usually around £400 to £500, and may also receive lender commission. 

Both models are used by brokers regulated by the Financial Conduct Authority (FCA). Which one suits you often depends on how simple or complex your case is.

Key takeaways:

  • Both models are regulated by the FCA when providing mortgage advice in the UK.
  • Fee-free brokers usually earn a procuration fee from the lender
  • Fee-charging brokers may charge on top of lender commission, or sometimes instead of it.
  • Fee-free brokers often suit straightforward cases like standard residential purchases or simple remortgages.
  • Fee-charging brokers can make sense for non-standard cases that need more work.
  • "Free" doesn't mean no money is changing hands. It means you are not being charged directly for the broker's advice.

How fee-free mortgage brokers actually work

Fee-free mortgage brokers are paid by the lender rather than directly by you. When your mortgage completes, the lender pays the broker a commission for arranging it, called a procuration fee. The broker gets paid if the mortgage goes through.

Industry reporting often puts that fee at around 0.35% of the mortgage value, though it varies by lender and product. So if you borrowed £200,000, a 0.35% procuration fee would be about £700 paid by the lender to the broker.

These figures are illustrative examples only and are not guaranteed amounts. Actual commission rates and fees vary by lender and broker.

A fair question is whether the broker will push you toward the lender paying the most. Brokers giving regulated mortgage advice in the UK must be authorised by the Financial Conduct Authority, and the FCA requires that their recommendations must be suitable for your circumstances, not the lender paying the highest commission.

Good brokers should also be clear about how they're paid and what commission they're receiving. If you're unsure, ask them to explain it in writing before you move forward.

You should also know that some brokers are whole-of-market, while others only work with a smaller panel of lenders. Even whole-of-market brokers may not cover every deal, as some mortgages are only available directly or through selected brokers.

If you want a deeper explainer on broker scope, you can read more about what independent mortgage advice means.

How fee-charging mortgage brokers work

Fee-charging mortgage brokers charge you directly for their advice or service. They may still receive commission from the lender as well.

There are three common fee structures:

  • Flat fee: A fixed amount, often around £400 to £500 for a straightforward case. A broker may only charge this on completion, while another may ask for part of it upfront.
  • Percentage fee: Based on the size of your mortgage. This is often somewhere between 0.3% and 1% of the loan, depending on the broker and the case. For example, 0.5% of a £250,000 mortgage would be £1,250.
  • Hybrid fee: It means the broker charges you a fee and also receives lender commission. That arrangement is allowed, but the broker should explain clearly what you're paying and how they're being paid.

Fee-charging can make sense in certain situations. If your application needs more work, the broker may spend much longer on it. That could mean more lender research, more underwriter back-and-forth, more paperwork, or fewer lenders willing to consider the application.

That's why fee-charging brokers are often more common in areas like:

  • Bad credit
  • Self-employed income with unusual accounts
  • Contractor or freelance income
  • Portfolio landlord borrowing
  • Unusual properties
  • Later-life lending

A side-by-side comparison:

What you compare Fee-free broker Fee-charging broker
Cost to you No direct fee for the advice A fee, typically £400 to £500, or 0.3 to 1% of the loan
How the broker is paid Lender commission only Borrower fee, sometimes lender commission as well
Lender access Often whole-of-market, but some deals are direct-only Often whole-of-market or specialist panels
Typical case fit Employed applicants, clean credit, standard property Self-employed, bad credit, complex income, unusual property, portfolio landlords
Service style Often online-first, with higher case volume Often a dedicated adviser, lower case volume per adviser
Regulation FCA-authorised FCA-authorised
Independence Recommendation must suit your situation, not commission The same FCA standard applies
If the deal falls through Usually no fee in any case Depends on broker. Reputable ones make this clear in writing upfront

For a more detailed breakdown of charging models, read about typical broker fees and what they cover.

When a fee-free broker is likely to suit you

A fee-free broker is often a good fit when your case is fairly standard. That usually means there are plenty of lenders who could consider you, and the case doesn't need specialist placement work.

Typical examples include:

  • First-time buyers with employed income and clean credit
  • People moving from one property to another with a standard residential mortgage
  • Remortgaging from one fixed deal to another on the same property
  • Borrowers buying a normal residential property
  • Individuals who are happy to communicate mainly online or by phone

This is one reason fee-free brokers are common for first-time buyer mortgages. Many first-time buyer cases are straightforward enough for this model to work well.

A common worry is that fee-free means lower quality. Fee-free just describes how the broker gets paid. It doesn't tell you how responsive the service will be or how carefully your case will be handled. 

Habito sits in this category. Habito is fee-free and whole-of-market, and we earn commission from the lender when a mortgage completes.

When a fee-charging broker may be worth it

Paying for a broker may be worth it when your case needs extra time and access to lenders with more complex criteria.

That often includes:

  • People with bad credit, such as defaults, CCJs, or recent missed payments, where lender choice may be narrower
  • Borrowers using self-employed mortgages
  • Contractors or freelancers with income that doesn't fit a standard payslip model
  • Buyers of unusual properties, such as non-standard construction homes, listed buildings, ex-local authority flats with short leases, or flats above commercial units
  • Portfolio landlords with multiple properties
  • Borrowers needing later-life lending, retirement interest-only, or other interest-only options, which require a credible strategy to repay the loan balance at the end of the mortgage term.
  • Those who've already been declined and need careful reworking of the case

If you fall into one of those groups, the broker may need to spend significantly more time on your application. 

Paying a fee doesn't automatically mean better outcomes. It also doesn't mean you're being overcharged. That fee reflects the extra work involved.

What could go wrong with either model

Both models come with different risks and trade-offs. Fee-free brokers can vary in service depth or lender access, while fee-charging brokers may involve upfront or non-refundable fees.

Don't assume fee-free is always better or that fee-charging means better service. Understanding the watch-outs before you choose matters.

Watch-outs with fee-free brokers

Access through a fee-free broker can sometimes be narrower than it first appears. A broker may be whole-of-market for broker-available lenders, but certain lenders and products are still direct-only. For example, deals from lenders like First Direct are only available if you apply directly.

Service depth can also vary. Some fee-free firms work at higher case volume, which can mean less time with one adviser. A practical question worth asking your broker is who will actually manage your case from start to finish.

Another issue is conditional selling through estate agents. Some estate agents strongly push buyers toward an in-house broker, sometimes describing the service as free or implying it will help your offer get accepted. You're not obliged to use them, and you can read more about why you don't have to use your estate agent's broker.

Watch-outs with fee-charging brokers

The biggest watch-out is upfront fees. Some fee-charging brokers ask for payment at the start of the process rather than on completion, so it's important to confirm in writing whether you'll get that money back if the mortgage doesn't go ahead. Getting that answer upfront can avoid a lot of frustration later.

Another is a fee plus commission stacking. If a broker is earning from both sides, you should know what they're charging you and what they may also earn from the lender.

Be cautious with specialist labels, too. A broker calling themselves a "complex case specialist" doesn't automatically mean the fee is justified or that your case is as complex as they suggest. Certain applications genuinely need specialist support, while others are more routine than the label implies, so it's worth getting a second opinion.

Before you agree to anything, it also helps to review the questions you should ask your mortgage broker.

This article is for general information only and isn't personal financial advice.

The information is based on guidance from organisations including FCA, MoneyHelper, and GOV.UK. Mortgage products, broker fees, and lender criteria can change over time, so it's worth checking the latest information or speaking to a qualified adviser.

Frequently asked questions

A few of the questions that come up most often when people compare broker charging models.

Are mortgage brokers free?

Not always. Fee-free brokers don't charge you for the advice. They're usually paid by the lender when your mortgage completes, often at around 0.35% of the loan, though that varies. Many brokers do charge a fee and may also receive lender commission. Both models are regulated by the FCA when giving mortgage advice in the UK.

Do mortgage brokers charge a fee in the UK?

Many do, but plenty don't. Fee-free brokers are common, especially for standard residential cases. Fee-charging brokers are also common, particularly in specialist areas. A straightforward case might cost around £400 to £500, while more complex cases can cost more depending on the broker and the work involved.

How does a mortgage broker get paid?

There are usually two possible income streams. One is the lender's commission, called a procuration fee, paid when the mortgage completes. The other is a fee paid by you, the borrower. A broker may use one model or combine both. A good broker should explain this clearly before you commit.

Why use a mortgage broker?

A mortgage broker helps you compare deals across many lenders and match your application to lenders that may suit your situation better. That can save time and reduce guesswork. It can be especially useful if you're buying your first home, self-employed, or dealing with past credit issues.

Talk to a Habito mortgage expert

If you're at the start of your search, you may want to get a Mortgage in Principle before going further. Options available to you will depend on lender criteria, affordability, and your personal circumstances.

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

Habito is whole-of-market and FCA-regulated, and our advice is free, so our advisers can compare a wide range of mortgage deals available to you.

Sources: FCA, MoneyHelper and GOV.UK guidance current at publication date.

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