Secured loan fees: broker fees and lender charges explained

What is a secured loan broker fee?

A broker fee pays for the broker's service. Depending on the agreement, that can include assessing your circumstances, researching suitable products, providing advice and managing the application with the lender. Ask what the service includes and which lenders or products the broker can consider.²

There is no single standard broker fee for a secured loan. Firms may use a fixed charge, a percentage of the borrowing or another method. A larger loan can therefore produce a larger fee under some charging structures, without changing the percentage.³

If the fee is expressed as a percentage, request the amount in pounds and ask which balance it is calculated on. If the fee could change as the application develops, ask what would cause that change and how you would be told.

The useful comparison is the actual charge for the service offered, together with the cost and suitability of the proposed loan.

Can a broker receive commission and charge a fee?

Yes. A broker may receive commission from the lender and also charge the customer a fee. Commission and the customer fee are separate payments.

The broker should explain its remuneration, including whether it receives commission and whether that commission reduces the fee you pay. For relevant regulated mortgages, commission information is also disclosed in the mortgage documentation. Ask where it appears and how the arrangement works in your case.⁴

A service with no customer broker fee can still involve lender charges and interest. Equally, paying a broker fee does not prove that a recommendation represents better value. Compare the service and the complete borrowing cost.

What lender charges might apply?

The lender supplies the money, so its charges are separate from the broker's fee. Product names vary, and several labels can describe similar costs. Ask for an itemised explanation rather than assuming that an arrangement fee, product fee and application fee are always three different charges.

Not every loan includes every charge. Some costs may be covered by the lender or included in another fee. A lender's valuation also serves a different purpose from a detailed survey of the property's condition.⁵

When do you pay secured loan fees?

Ask when each fee becomes payable. The answer can differ between the broker, lender and any firm carrying out work on the application.

A charge might be due before an application proceeds, at an agreed stage or when the loan completes. A free initial conversation does not establish that the later service is free.

The broker's disclosure should explain its fees, when they are payable and, where applicable, when they can be reimbursed.⁴ Obtain the terms before accepting a charge or instructing work that creates a cost.

It helps to ask: “If I stop at this stage, what would I owe, who would I owe it to, and what would be returned?”

How the payment method changes the cost

Paying a fee separately

You pay the charge from money you already have, instead of financing it through the secured loan. This avoids interest on that fee under the loan agreement, but reduces the cash you have available.

Consider whether paying it would leave enough for essential expenses and unexpected bills. Using another credit account to pay the fee creates a separate borrowing cost that also needs to be considered.

Adding a fee to the borrowing

Where the lender allows it, a fee may be added to the loan balance. You then repay the fee through the loan and can pay interest on it. The eventual cost is therefore more than the original fee when interest is charged.²

Ask for the amount needed for your purpose and the financed fees to be shown separately. Check the resulting monthly repayment and total amount repayable.

Deducting a fee from the advance

A fee can be taken from the money being released. That leaves less available for your project or other intended use, while the debt still includes the amount used to pay the fee.

Increasing the borrowing to replace that deduction increases the balance you must repay. Confirm the net amount available after all deductions, alongside the total loan balance and anything payable from your own funds.

The phrase “no upfront payment” describes timing. It does not tell you whether a fee exists or whether interest will be charged on it.

How do fees affect APRC and the total repayment?

The interest rate describes the interest charged on the borrowing. APRC, meaning annual percentage rate of charge, includes interest and relevant charges over the mortgage term using prescribed assumptions. It provides a broader comparison, although it is not a forecast of future variable rates.⁶

Request the personalised mortgage illustration, often called an ESIS, or European Standardised Information Sheet. Read the fees, payment schedule, total amount repayable and conditions together.²

For a useful comparison, ask each provider to show:

1. The same amount available for your intended purpose after deductions.
2. The same repayment term, where possible.
3. Fees paid separately and fees included in the balance.
4. The interest rate, APRC and total amount repayable.
5. Costs if you repay earlier than planned.

A lower rate can be outweighed by larger fees. A longer repayment period can also make the monthly payment look more manageable while increasing the overall cost.⁷

Avoid counting a financed fee twice. If it is already included in the loan balance and illustrated repayments, adding the same fee again to those repayments would overstate the comparison. Separately paid fees still need to be included where the illustration's total does not already account for them.

Are fees refunded if the loan does not go ahead?

Some fees may be refundable and others may not. Establish what happens if the lender declines the application, you decide not to proceed or an offer expires.

The position can depend on the fee terms, the work completed and why the application ended. For example, a valuation that has already been carried out creates a different question from a service that was never provided.

Ask for the refund position for each charge in writing. Do not assume that a broker's refund terms also cover a separate lender or valuation fee. MoneyHelper specifically advises checking whether booking and arrangement fees are refundable if the mortgage does not proceed.⁵

If the explanation does not match the agreement, or you think the charge is unfair, ask the firm to review it.

What charges can apply when you repay early?

An early repayment charge may apply if you repay the loan, or more than a permitted amount, during a specified period. Ask when it applies, how it is calculated and whether there is an allowance for overpayments.⁸

An exit or discharge fee is a separate potential administrative charge associated with closing the loan. It should not be confused with an early repayment charge. Check whether either or both apply.⁵

If you expect to sell your home or refinance, compare costs at the likely repayment date. Include the outstanding balance, payments already made, separately paid fees and any settlement charges. Ask the lender for a settlement figure before repaying in full.⁹

Can there be charges during the loan?

Check the lender's tariff for administrative services and charges connected with missed payments. Ask which are optional service charges and which could arise if payments fall behind.

For regulated mortgages, charges for payment shortfalls are subject to FCA rules limiting them by reference to a reasonable calculation of additional administration costs.¹⁰ If repayments become difficult, contact the lender promptly to discuss support.¹¹

How can you judge whether a fee offers value?

Ask what work the fee covers and compare the proposed service with other options. A fee being similar to another broker's charge does not, by itself, establish that it offers fair value.

In its 2026 review of second charge mortgages, the FCA highlighted difficulties comparing intermediary fees and questioned how some firms justified their charges.³

Request a clear explanation of the fee early enough to use it in your decision. You can ask whether a lower fee is available, but do not assume it can be negotiated or that a reduced fee makes the loan suitable.

Are upfront fees always a warning sign?

Genuine firms can charge upfront fees. However, pressure to pay urgently, unexpected requests for vouchers or cryptocurrency, and repeated demands to release a promised loan are warning signs.

Check the firm's identity, permissions and contact details using the FCA's Firm Checker. Use those verified details to confirm an unexpected payment request. Paying a fee is not a guarantee that a loan will be approved.¹²

What if you disagree with a charge?

Ask the firm for a breakdown and the terms it relies on. Keep the fee agreement, mortgage illustration, payment receipts and relevant correspondence.

If the issue remains unresolved, complain to the firm first. The Financial Ombudsman Service may be able to consider an eligible complaint if you are unhappy with the final response or the firm has not responded within the applicable timeframe. Its service is free.¹³

Before agreeing to the borrowing

You should be able to identify every fee, who receives it, when it becomes payable, whether it is financed and what happens if the application stops.

Also compare other funding methods where appropriate, including a further advance, remortgaging or an unsecured loan. Their costs and risks can differ from those of a second charge mortgage.⁴

Habitat Loans introduces customers to Loans Warehouse, where a qualified broker can assess secured borrowing options. Ask for the full fee position before committing, alongside the net amount available, the repayments and the reason the recommended loan fits your circumstances.