In this brief guide, we are going to discuss Mortgage broker fees. If you are looking to get a mortgage then making sure you know the mortgage broker fees which are being charged.
Mortgage broker fees
Huuti is a fee-free mortgage broker but we have put together this mortgage broker fee guide so you can understand the fees which other mortgage brokers may charge you. With this information in hand, you will be able to make a better-informed decision.
When looking to get a mortgage one of the key things you will want to know is what the mortgage broker fees are as well as what the other mortgage costs are. Some mortgage brokers such as Huuti charge no mortgage broker fees but other mortgage brokers may charge you a percentage of the mortgage as a fee or a fixed price.
In some cases, the mortgage broker will charge you a fee at the beginning of the mortgage process before they do any work for you and a fee once you have gotten your mortgage and completed on your house purchase.
If you are looking to use a mortgage broker then figuring out what the mortgage broker fees are could significantly affect the mortgage broker you go with as these costs can be incredibly high.
Example: a mortgage broker fee of 2% on a £500,000 mortgage would cost you whilst in comparison a mortgage broker charging you a fixed fee of £250 would provide incredible savings.
Mortgage broker fees are an important factor if you are choosing to use a mortgage broker to get your mortgage but they aren’t the only thing you should take into consideration.
You should consider the experience of the mortgage broker, their speed, their use of technology, their mortgage product coverage and any other factors which may be relevant to you.
After taking all of this into consideration it may be worth knowing that almost all mortgage brokers are paid a procuration fee by the mortgage lender once you have completed on your home purchase. This means, aside from the mortgage broker fees the broker may charge you they are likely also being compensated by the mortgage broker. Usually, this is about 0.4% of the mortgage amount.
Knowing the above could help you negotiate much better.
Types of mortgage broker fees
There are various ways in which mortgage brokers could charge you a fee. We have highlighted some of those ways below.
Hourly rate mortgage broker fees
Hourly rate charges are one of the ways a mortgage broker can charge you for their services. Hourly rate charges are not very common but could be seen on more complex mortgage cases or very large mortgages such as million-pound mortgages, commercial mortgages for large volumes and above.
Before you start any work, a mortgage broker should usually inform you of their terms of business and charges through an initial disclosure document. This will allow you to know in what way they intend to charge you. If you are still confused then you should simply ask the mortgage broker.
As you can imagine an hourly rate charge could rack up very quickly and end up costing you a lot.
There are now a few mortgage brokers who operate on a fee-free basis. The reason they do this is that they are paid a commission by the mortgage lender when the mortgage has completed. The mortgage broker will let you know how much they are getting paid by the lender.
Fixed mortgage broker fees
Some mortgage brokers will charge a fixed fee. This will not include any other fee they may receive from the mortgage lender.
Percentage of mortgage
Another way mortgage brokers levy a charge on you is by charging you a percentage of the mortgage which you are seeking. They will usually only require you to pay this fee once your house purchase has been completed.
Some mortgage brokers will charge a combination of a fixed fee as well as a percentage of the mortgage balance.
Using a mortgage broker with no mortgage broker fees
You may want to consider using an independent mortgage broker to get a mortgage.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.
In this brief guide, we are going to discuss Mortgage broker fees. If you have any questions or comments please let us know.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.