Why you're never alone when you want a loan

Well over a million of us will take out a mortgage this year - but with thousands of different deals to choose from, you may feel you need a helping hand.

Many people will opt to use a mortgage broker, who can survey the market and hopefully find the one that's right for you. Some brokers charge a fee of up to 1%. Others don't charge anything, though there will often be a lender's fee and other costs attached to the mortgage.

But should you pay a fee for using their services? What's the difference between those that do charge and those that don't? And if you do opt to pay, how much should you shell out?

Many of the best-known names charge a broker fee, including Charcol, Savills Private Finance and Chase de Vere Mortgage Management. If your requirements are complex or specialist, you may feel you want to pay someone. If your needs are straightforward or you are happy to sort it all out over the phone or the internet, you probably won't. That said, it is perfectly possible to get face-to-face advice and still not pay a fee.

Probably the best known of the no-fee brokers is Bath- based London & Country Mortgages (www.lcplc.co.uk). It doesn't do face-to-face advice, though says the quality of service it offers is exactly the same as with a broker that does. "We are a telephone and post operation which keeps our overheads down," says a spokesman. "We operate purely and simply on the commission paid by the lender."

That's something many people won't be aware of: in the majority of cases, a mortgage broker earns commission from a lender when he or she recommends one of its mortgages. This commission is known as the "procuration fee". These fees can vary but are typically 0.25%-0.35% - so if it's a £100,000 mortgage, the commission to the broker might be £250-£350.

The spokesman says that if borrowers opt to pay a fee, they have to factor this in as yet another cost. "Is it fair for a broker to be charging a fee and receiving a procuration fee? It's almost a double charging effect."

Mortgageforce (www.mortgageforce.co.uk), a mortgage broker with 75 locations across the UK, says the vast majority of its customers don't pay a fee. It says about one in 20 clients, whose circumstances are particularly complicated, are charged a fee, which never exceeds 1%. "Our principal mode of operation is face-to-face advice," it adds.

However, brokers who do charge a fee argue that with them, you are paying for a "Rolls-Royce" service where they take away all the hassle. They also claim that some no-fee brokers may try to sell you products you don't need.

London-based Charcol (www.charcolonline.co.uk) charges up to 1% if you want face-to-face or over-the-phone advice though says the average is 0.4%-0.5% - some £400-£500 for a £100,000 mortgage. It will depend largely on the size of the loan. If it's for £25,000 the fee would probably be 1% but if it's a £500,000 loan it would be a lot less. Charcol has 13 branches nationwide. It operates an online service where you don't pay a fee but this is execution-only and will fall short of specifically recommending a product.

London-based Savills Private Finance (www.spf.co.uk) charges up to 1% but says the average fee is 0.5%. What you pay "depends on the urgency, the complexity, how good our solution is," says Mark Harris at the company.

London-based Chase de Vere Mortgage Management (www.cdvmm.com) charges up to 1% but generally rebates all the procuration fee to the borrower.

And the fees don't stop there...

Whether you decide to go to a mortgage broker or deal direct with a lender, there are other fees and costs you are likely to have to grapple with.

Lender's fee: also known as arrangement fee or completion fee. Typically £200-£300.

Booking fee: . Some lenders/brokers may charge a fee for "booking funds in advance". In some cases it's around £50.

Mortgage indemnity insurance: aka Mig. Imposed by some lenders when people are looking to borrow above a certain amount, such as 90% or 95% of the property's value. It can add hundreds of pounds to a borrower's bill, and reimburses the lender if you fail to meet repayments and it makes a loss.

Survey fees: As a minimum you will probably have to pay the lender a mortgage valuation fee. Some deals provide a free valuation. However, many home-buyers will want to carry out their own full structural survey.

Legal fees: Will be a few hundred pounds. Again, with some deals, particularly those aimed at remortgagers, there will be none.

Stamp duty: For properties costing between £60,000 and £250,000 the duty is 1%, while below £60,000 sales are free of stamp duty. Between £250,000 and £500,000 the duty is 3%, while for homes costing more than £500,000 it's 4%. But watch out for rises in next week's Budget.