In short: UK mortgage brokers are paid in one of three ways – a fee charged to you, commission paid by the lender (called a procuration fee), or a combination of both. A broker describing itself as “fee free” is not working for nothing; it is being paid by the lender instead of by you. Every regulated firm must disclose how it is paid, in writing, before you are committed to anything.

By Damian Youell, Senior Mortgage Broker and Company Director at NeedingAdvice.co.uk

“How much is this going to cost me?” is one of the first questions people ask, and it is a reasonable one. The answer is less simple than it should be, because the industry uses three different charging models and the language around them is genuinely confusing. This article explains how broker pay actually works, so you can compare firms properly rather than picking whichever one says “free” loudest.

The three ways a UK mortgage broker gets paid

Model Who pays What it means for you
Lender commission only
(often marketed as “fee free”)		 The lender No invoice to you. The broker receives a procuration fee from the lender on completion. The firm still has to cover its costs, so it needs the case to complete.
Client fee only You The broker charges you directly and does not retain lender commission, or rebates it to you. Less common in residential lending, more common on complex or specialist cases.
Fee plus commission Both The most common model. A fee to you alongside the lender’s procuration fee. The fee is usually smaller than under the fee-only model because it is not the firm’s whole income.

What “fee free” actually means

A fee-free broker is not a charity and is not losing money on you. It is a broker that takes all of its income from lender commission. That is a legitimate model and for a straightforward case it may well be the right one. But it is worth understanding the two things it implies.

First, the firm only earns if the mortgage completes, which means cases that are complex, slow, or likely to fall through are less commercially attractive to it. Second, procuration fees are not identical across lenders. Under FCA rules a firm must not let its own remuneration drive the recommendation it makes, and firms are required to have controls in place for exactly this reason. You are entitled to ask how a firm manages that, and a good one will answer without hesitating.

When a fee is usually worth paying

For a clean, mainstream purchase the commission-only model often works perfectly well. Where a fee tends to earn its keep is on cases that take real work:

  • Adverse credit. Defaults, CCJs or a thin file mean sifting criteria across a specialist panel rather than running a comparison table.
  • Self-employed and contractor income. Lenders treat day rates, dividends, retained profit and short trading histories very differently from one another.
  • Non-standard property. Concrete construction, flat roofs, flats above commercial premises, listed buildings, annexes.
  • Anything with a deadline. Chains, auction purchases, bridging, or a product expiry that cannot move.
  • Cases already declined. Rebuilding a declined application takes more work than placing a fresh one.

The honest framing is that a fee buys persistence. On a case that will complete easily, that persistence is worth less. On a case already turned down once, it is usually worth a great deal.

What you should always be told, and when

Regardless of model, a regulated firm has to be clear with you about cost before you are committed. In practice you should expect:

  • A written explanation of how the firm is paid, before an application is submitted.
  • Whether the firm receives commission from the lender as well as any fee from you.
  • Exactly when a fee becomes payable – on application, on offer, or on completion – and whether it is refundable if the case does not proceed.
  • Whether the firm is whole of market, works from a lender panel, or is tied to a single lender. That is a separate question from cost, and arguably a more important one.

If a firm is vague about any of these, that is information in itself.

Our own position, for the avoidance of doubt

We do not charge an upfront broker fee. The initial consultation is free and carries no obligation to proceed. Where a fee applies to your case, it is explained clearly and in writing before any application is submitted, so you know the position before you are committed to anything. We do not describe ourselves as fee free, because that would not be accurate.

Questions worth asking any broker

  1. How are you paid on my case – fee, commission, or both?
  2. If there is a fee, when does it become payable and is it refundable?
  3. Do you have access to the whole market, a panel, or a single lender?
  4. Do you receive different commission from different lenders, and how do you manage that?
  5. What happens if my application is declined – do you place it elsewhere at no further cost?

Related guides

This article is general information about how mortgage broker remuneration works in the UK and is not a recommendation about any particular firm or product. Your home may be repossessed if you do not keep up repayments on your mortgage.