How do mortgage brokers get paid — and does it affect my loan?

General advice only · AFSL 222640 · Global Mutual Funds Pty Ltd

The direct answer

Most Australian mortgage brokers are paid by the lender, not by you: an upfront commission when the loan settles and an ongoing trail commission while it stays open, both calculated on the loan balance. Since 1 January 2021 brokers must act in your best interests and prioritise your interests over their own. Commissions must be disclosed — ask for the dollar amounts.

What it depends on

The full answer depends on your specific circumstances. Here’s what matters.

Commission structure

Commission rates vary by lender and are typically a fraction of a percent of the loan. Commissions may be clawed back from the broker if you refinance or repay within the first year or two, which can influence advice about switching.

The Best Interests Duty

Brokers must record why the recommended loan is in your best interests. You can ask to see that reasoning.

Panel size

A broker can only recommend lenders on their panel. Some well-known lenders do not use brokers at all.

The last 10%

What a qualified professional can add

The answer above covers the general position. Here’s where professional judgement — applied to YOUR specific situation — makes the difference.

Comparing lender policies you cannot see from advertised rates
Managing the application so it is right the first time
Reviewing your rate over time and prompting repricing or refinancing

Questions to ask before you engage one

If you decide to engage a professional, these questions help you evaluate whether they’re right for your situation.

How much will you earn upfront and in trail from this loan, in dollars?

How many lenders are on your panel, and which major lenders are not?

Can I see the notes explaining why this loan is in my best interests?

Would a clawback affect your advice if I refinance in the next two years?

Your next step

Ask your broker for their credit guide and a written commission disclosure. Knowing how they are paid lets you judge their recommendations with clear eyes.

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