When arranging a mortgage, you need to consider the additional costs as well as your monthly repayments. As well as the mortgage adviser’s fee for their service, these costs may include booking or arrangement fees, application fees and early redemption fees (which you might end up paying later if you wanted to leave the mortgage agreement early). Make a note of all these fees, and take them into account when comparing your mortgage options.
Mortgage advisers may take payment in a number of different ways. Talk to them about their fees in each case to find a payment method that suits you both.
- Fixed fee – some advisers will arrange your mortgage for a fixed amount. Make sure they confirm in writing precisely what is included in the agreed fee.
- Hourly rate – make sure the adviser gives you an estimate of how long the work is likely to take.
- Commission – mortgage advisers are still allowed to be paid by commission from the company that sells you the mortgage product. Ask your adviser about the options.
- Percentage of mortgage – the adviser or broker is paid at a rate equivalent to an agreed percentage of your mortgage (so if this agreed rate is 1 per cent, for example, then for a £500k mortgage the fee would be £5,000).