How Mortgage Brokers Get Paid in Australia | Broker Commission Explained
- Feb 12
- 5 min read
In Australia, mortgage brokers are typically paid by lenders through an upfront commission and an ongoing trail commission once your home loan settles. For most standard residential loans, borrowers do not pay a direct fee for using a broker.
Under Australian law — including the National Consumer Credit Protection (NCCP) Act and the Best Interests Duty reforms introduced in 2021 — mortgage brokers must act in the client’s best interest when recommending loan products.
This means broker commissions cannot influence the suitability of a loan recommendation.
💡 If you're new to this, read our First Home Buyer Loan Guide to see how broker advice can save you time and money.
How do mortgage brokers get paid in Australia?
Do mortgage brokers really work for free? At My Finance Agent, most of our loan services are free for borrowers. This doesn't mean we don't get paid—it means we don't get paid by you, the borrower. Instead, we get paid via lender commissions, which are calculated as a small percentage of your loan balance.
There are a few instances where we may charge an upfront fee. But this is only for complex or high-compliance lending scenarios, such as Self-Managed Superannuation Fund loans, loans involving small loan amounts, and/or short repayment timeframes. In these cases, we would provide you with an upfront quote before proceeding.
How do lender commissions work?
In Australia, lender commissions earned by finance brokers typically have two components:
1. What is an upfront payment?
Upon settlement of your loan, the broker receives a commission from the lender. This commission is calculated as a percentage of the loan balance, minus any balance in offset. The calculation and payment timing vary between lenders, but it usually occurs some days after settlement and is paid the following month.
The upfront component remunerates your broker for their time and expertise in matching your needs with potential lenders, conducting any credit analysis, and preparing your loan application accurately and efficiently. Your broker will also liaise between the lender and your settlement team, and coordinate the many other details that ensure your loan experience is smooth and easy.
2. What is trailing commission?
In addition to the upfront payment, brokers may receive a trailing commission. This is an ongoing monthly commission payment based on a percentage of your loan balance, minus any balance in offset. In Australia, trail commissions are typically around 0.10% to 0.20% per year, paid monthly. It continues for the duration of the loan. When you discharge or refinance your loan, any trailing commission ends.
Trail commission encourages brokers to:
Maintain long-term client relationships
Conduct annual loan reviews
Negotiate better rates with lenders
Support refinancing if needed
At My Finance Agent, this aligns with our Annual Home Loan Health Check, ensuring your loan remains competitive in the Australian market.
All of this information, including how we get paid, is documented in your Game Plan, which you will receive before proceeding with a loan application.
Upfront vs Trail Commission – What’s the Difference?
Here’s a clear comparison to help you understand the broker payment structure in Australia:
Feature | Upfront Commission | Trail Commission |
When is it paid? | Once, at the loan settlement | Monthly, for the life of the loan |
Who pays it? | The lender | The lender |
Based on | Total loan amount (excluding offset) | Remaining loan balance |
Is it ongoing? | No | Yes |
💡 What Does This Mean for You?
Understanding how mortgage brokers are paid is important — but the more important question is: Is your current home loan still competitive?
Many Australians don’t realise that lenders often reserve their sharpest rates for new customers. If your loan hasn’t been reviewed in the last 12 months, you could be paying more than necessary.
👉 Request a free home loan review here (no obligation)
If the lender pays the broker, will I get a better deal if I go directly to the bank?
It may surprise you, but going directly to the bank can actually be more expensive than approaching a mortgage broker. However, using a mortgage broker saves you money because they can access a broader range of mortgage products and negotiate on your behalf. My Finance Agent has access to over 60 lenders and guarantees you the best deal for your circumstances.
While you may think brokers will recommend a loan plan that benefits their commission earnings, since the introduction of the Best Interests Act by ASIC in 2021, it is illegal to do so. Therefore, you can rely on us to find mortgage rates that act in your best interest. Getting you the best interest rate and terms is part of our job.
Sounds simple enough, right? Well, not quite. Sometimes, mortgage brokers have to deal with clawback fees.
What are 'clawback fees'?
If a home loan is discharged or refinanced within 12 to 24 months of settlement—the exact period differs between lenders—the lender may enact a "clawback fee."
A clawback fee means that the broker must repay some or all of the loan commission. The broker doesn't get to negotiate or plead their case. The lender automatically deducts the previously paid commission, leaving the broker out of pocket.
Sometimes a borrower's situation can quickly and unexpectedly change, but if, for any reason, you anticipate your home loan will be repaid or refinanced within two years of settlement, we ask that you inform us in advance.
If the lender pays the broker, who is the broker really working for?
The Australian lending system may be designed around lender-based remuneration but, as your mortgage broker, we work for you. We are governed by the Australian Securities and Investment Commission's rules that specify that mortgage brokers must act in the best interests of consumers. Brokers are required to "determine and assess the best interests of the consumer and present recommendations in line with those interests." The law safeguards borrowers by ensuring that brokers are legally required to put their clients' needs first.
How do we exercise our best interest duty at My Finance Agent? We take the time to understand your unique financial situation, goals, and needs in detail. From there, we find loan products that best match your circumstances. In short, best interest duty ensures that a broker cannot recommend a product or service they will profit from unless they can demonstrate that it is in the client's best interests. In our case, we also believe that it makes good, ethical business sense! We hope to become your trusted lending expert for life.
You may be interested to learn that, unlike brokers, banks are not bound by best interest duty. Should you go directly to your bank for a loan, they have no obligation to compare competitor alternatives. This leaves you with two choices: accept your bank’s offer or do your own research. Of course, the third option is to let My Finance Agent do the legwork for you!
To read more about the best interests duty, click here.
🤝 What Happens If You Use a Mortgage Broker?
Here’s how it works:
We assess your financial goals
We compare lenders across our panel
We explain commissions transparently
We manage the paperwork
We review your loan every year
It’s simply about ensuring your mortgage remains competitive in the Australian market.
Your best interests are always our top priority
If you have any further questions about how mortgage brokers get paid, please don't hesitate to contact us. Transparency is one of our promises and we would be delighted to talk further. We're here to help you navigate the entire lending process with care, confidence, and clarity!
Got questions? Call and talk with a lending expert on (02) 8313-8400 or request a call back.