According to research from Boon Brokers, which surveyed around 2,000 people – half of whom had bought property and half of whom had remortgaged in the last year – the most common purchase fee charged was £500, cited by nearly a quarter of participants. This was followed by £700 and £600, which were chosen by around 16% of participants each.
The research did not include borrowers who opted for a fee-free broker and focused on borrowers who decided to pay a broker fee for a residential purchase. It also did not include broker fees for commercial or buy-to-let (BTL) purchases.
More than half – 56% – paid a broker fee of between £500 and £700 – with those charged under £300 only accounting for about 8% of those surveyed.
On the remortgage side, the most common fee charged was £500 at around 23%, followed by £700 and £600 at approximately 15% each.
However, around 45% of participants said they paid £700 or more. This shows that borrowers are accepting price increases from fee-charging brokers rather going for fee-free alternatives.
The growth of ‘just-off-high-street’ lending
Sponsored by Pepper Money
Most fees charged after mortgage offer issued before transaction completes
Nearly half of purchase customers – 46% – said their broker fee was charged after the mortgage offer was issued but before the transaction completed.
Over a quarter – 27% – said the broker fee was charged after the mortgage application was submitted but before the mortgage offer was issued. This compares to around 12% of remortgage customers.
Only 15% of purchase respondents were charged a broker fee for their purchase application before the mortgage application was submitted.
Within the remortgage segment, 58% said they were charged a broker fee after the mortgage offer was issued but before completing the transaction, and less than 10% were charged a broker fee for their remortgage application before the full mortgage application was submitted.
Most customers opting for fixed-fee option
More than half – 44% – said they opted for a fixed fee, with 29% choosing one based on the percentage of the loan and 19% citing the percentage of property value.
Only 7% of respondents were charged a broker fee, which is where the fee is divided across several stages of the purchase transaction.
Boon Brokers said the above was also in line with remortgage customers.
Customers unaware of fee-free options
Nearly a third of purchase and remortgage customers surveyed said they were unaware that they have the same access to mortgage lenders and products as fee-charging brokers.
Around a fifth in each segment said they were unaware that fee-free, whole-of-market mortgage brokers were an available option.
Nearly 12% of purchase customers said they used the fee-charging mortgage broker associated with the estate agent.
Around 15% of remortgage customers said they were recommended their broker through friends or family.
Only 4% of purchase customers said they thought they would receive a higher-quality service by using a fee-charging broker. This was in line with 5% of remortgage customers.
