Some online mortgage brokers are fee-free to the borrower, but not all. In the UK, every mortgage broker is paid a procuration fee by the lender when a mortgage completes. The difference is whether the broker also charges the borrower an additional fee on top of this.
When an online mortgage broker describes itself as “fee-free”, it means you are not charged a separate broker fee for advice or arranging the mortgage. Other online brokers do charge an additional fee, usually to reflect the level of service provided or the complexity of the case.
This article explains what “fee-free” really means in practice, how online mortgage broker fees work in the UK, and how to decide which option may be right for you.
How are online mortgage brokers paid in the UK?
All mortgage brokers in the UK receive a procuration fee from the lender once a mortgage completes. This applies whether the broker operates online or face-to-face, and whether or not they charge the borrower an additional fee.
The procuration fee is a standard part of the mortgage market and is paid by the lender for introducing and arranging the mortgage. It is not optional and does not vary based on whether the broker markets themselves as fee-free.
What does vary is whether the broker chooses to rely solely on this payment or also charges the borrower a separate fee.
What does “fee-free” mean when used by online mortgage brokers?
When an online mortgage broker says they are fee-free, it means the borrower does not pay a separate broker fee.
The broker still receives the lender’s procuration fee, but the cost of the service is not charged directly to the client. This model is common among online mortgage brokers, particularly those using digital systems to streamline applications and reduce overheads.
Fee-free does not mean the broker is unpaid, and it does not mean the service is automated or unregulated.
Why do some online mortgage brokers charge an additional fee?
Some online mortgage brokers charge a client fee in addition to the procuration fee paid by the lender. This is usually to reflect the time, expertise or level of involvement required.
Situations where an additional fee may apply include self-employed or contractor applications, multiple income sources, complex credit histories, or remortgages involving additional borrowing or specialist lenders.
In these cases, a fee can reflect the extra work required to structure the application and secure a suitable mortgage.
How much do online mortgage broker fees typically cost?
Where an additional fee is charged, the amount can vary.
Some brokers charge a fixed fee, while others charge a percentage of the loan amount. Fees may be payable on application, on mortgage offer or on completion, depending on the broker’s terms.
Any additional fees should be explained clearly before you proceed, including when they are payable and whether they are refundable if the mortgage does not complete.
Are fee-free online mortgage brokers less independent?
Not necessarily.
Fee-free online mortgage brokers can still be whole-of-market or have access to a broad panel of lenders. Being paid via a procuration fee does not restrict the range of mortgages they can recommend.
What matters more is whether the broker is whole-of-market or restricted, which lenders they work with, and how recommendations are made. A reputable broker should be transparent about their lender access, regardless of whether they charge a client fee.
Do fee-free brokers offer the same level of service?
Fee-free does not automatically mean a lower level of service, just as charging a fee does not guarantee a higher one.
Many online mortgage brokers operate fee-free models because digital systems allow them to work efficiently. Secure portals, online fact-finds and automated document tracking can reduce manual work and keep costs down.
However, service levels can vary. Some brokers provide highly responsive, hands-on support, while others run a more streamlined process designed for straightforward cases.
How should you choose between fee-free and fee-charging online brokers?
Rather than focusing only on whether a broker charges a fee, it’s usually better to consider overall suitability and value.
When comparing online mortgage brokers, consider their experience with similar cases, access to lenders, communication style, use of online systems and clarity around costs. In some situations, paying an additional fee may be worthwhile for specialist advice. In others, a fee-free broker may be entirely suitable.
Are online mortgage brokers required to disclose fees?
Yes. Online mortgage brokers must clearly disclose how they are paid and whether you will be charged an additional fee.
This information should be provided early in the process and included in formal documentation. If anything about fees or payment structures is unclear, you should ask for clarification before proceeding.
Do online brokers earn more by recommending certain lenders?
Lender procuration fees can vary, but brokers are required to recommend mortgages based on suitability, not commission.
Regulatory rules require advisers to act in the borrower’s best interests. A broker should be able to explain why a particular mortgage has been recommended and how it meets your needs.
Looking for online mortgage brokers with transparent fees?
If you want to compare advisers who clearly explain their fees and use online systems to support borrowers digitally, our Best Online Mortgage Brokers guide highlights firms selected for transparency, service quality and online delivery.
