The short answer
Most Australian mortgage brokers are paid by the lender, not the borrower. When your loan settles, the lender pays an upfront commission, and while the loan stays open it pays a smaller monthly trail commission. Some brokers also charge a fee for complex loans. Every broker must disclose fees and commissions in its credit guide and quote, and must act in your best interests whatever the commission.
Upfront and trail commission
| Payment | When it is paid | How it is worked out |
|---|---|---|
| Upfront commission | Once, after the loan settles | A percentage of the amount you actually draw down |
| Trail commission | Monthly while the loan is open | A smaller percentage of the outstanding balance |
Trail commission is why a good broker stays in touch after settlement: it rewards keeping you on a competitive loan. 15 emoney reviewers say emoney contacted them with a lower rate before they asked.
When brokers charge a fee
For most standard home loans the borrower pays the broker nothing directly. Some brokers charge a fee for complex work, such as commercial, development or hard-to-place loans. A fee is never a surprise if you read the credit guide first: it must list every fee before the broker starts work.
The rules that protect you
- Best interests duty. Since 1 January 2021 brokers must act in your best interests and put your interests first when there is a conflict, including over commission. See ASIC Regulatory Guide 273.
- No clawback charges. If a lender claws back commission because you refinance or repay early, the broker cannot pass that cost on to you.
- Commission on what you borrow. Upfront commission is calculated on the amount actually drawn down, not on the full approved limit.
- Disclosure. The credit guide and credit quote must explain fees and commissions before you commit. Moneysmart’s broker guide covers what to expect.
What to ask any broker about pay
- Do you charge me any fee, and when?
- Which lenders will you compare, and do their commissions differ?
- Will you review my rate after settlement?
emoney’s credit guide is free on request from 13 72 83. For the rest of your shortlist, use the seven-point broker checklist and our broker scorecard.
Broker pay: FAQ
Do mortgage brokers charge fees in Australia?
Most do not charge borrowers for standard home loans because the lender pays them a commission. Some brokers charge a fee for complex or commercial loans. Any fee must be disclosed in the broker's credit guide and quote before work starts.
What is trail commission?
Trail commission is a small ongoing payment a lender makes to a broker each month while your loan is open, usually calculated on the outstanding balance. It is one reason good brokers keep reviewing your rate after settlement.
Can a broker charge me if the lender claws back commission?
No. Since 1 January 2021, mortgage brokers cannot pass the cost of a commission clawback on to the borrower.
Does commission affect which loan a broker recommends?
Brokers must act in your best interests and prioritise your interests over their own, including when commissions differ between lenders. ASIC's Regulatory Guide 273 explains how this duty applies.