How Do Mortgage Brokers Get Paid in Australia?
Lenders pay brokers, borrowers do not. That much is on every broker website in the country. What almost none of them explain is what the commission is calculated on, what happens to it when you refinance, and why both of those were deliberately redesigned to work against the broker’s own interest.
The short answer
Australian mortgage brokers are paid by the lender the borrower ends up with, not by the borrower. There are two payments. An upfront commission when the loan settles, calculated as a percentage of the amount actually drawn down and net of any offset balance, and a trail commission paid monthly on the loan balance still outstanding. The borrower pays no fee for the credit assistance. Both payments must be disclosed in writing in the broker’s Credit Guide before any work begins, and the amounts for your specific loan appear in the Credit Proposal you receive before anything is lodged.
Upfront and trail: the two payments
Every home loan a broker arranges produces two payments from the lender, and only two. Neither comes out of your pocket, and neither is added to your loan.
The upfront commission is paid once, shortly after your loan settles. It is a percentage of the loan, and the section below explains exactly which loan figure it is a percentage of, because that detail was changed in 2018 and the change matters more than most people realise.
The trail commission is paid monthly for as long as the loan stays with that lender. It is a much smaller percentage, calculated on the balance you still owe rather than on what you originally borrowed. It stops the day the loan is discharged or refinanced elsewhere.
Both are paid by the lender out of the same budget that funds branch networks, call centres and advertising. A broker-originated loan reaches the lender without any of that infrastructure attached, which is why the channel exists at all and why it is free at the point of use. There is no separate pool of money, no loading on your rate for having used a broker, and no line item on your loan statement.
That is the whole structure. Everything else on this page is about the design decisions sitting behind it.
What upfront commission is actually calculated on
This is the part almost nobody publishes, and it is the single most useful thing to understand about how brokers are paid.
Until 2018, upfront commission across most of the market was calculated on the total approved facility. Borrow more, get paid more, whether or not you used the money. That structure was identified as a problem by ASIC’s Review of Mortgage Broker Remuneration, Report 516, and by the Australian Bankers’ Association retail banking remuneration review conducted by Stephen Sedgwick. The industry response came through the Combined Industry Forum, whose members included lenders, aggregators, the MFAA, the FBAA and the consumer group CHOICE.
The Combined Industry Forum agreed the standard commission model should avoid incentives that encourage consumers to borrow more than they need or will use, for example by basing commission on facility drawdown net of offset.
Lenders implemented that from late 2018. In practice it means the upfront commission is calculated on what you actually drew down, minus anything sitting in a linked offset account, measured a set number of days after settlement.
Follow that through to the consequence. If you settle a $500,000 loan and park $100,000 in the offset from day one, the commission is calculated on $400,000. The broker is paid less because you borrowed sensibly. There is no version of this arrangement in which a broker is financially better off telling you to take a larger facility than you need, which was precisely the point of the change.
The same package of reforms also moved the industry away from volume-based and campaign-based commissions, capped non-monetary benefits from lenders, and required ownership relationships above twenty per cent to be disclosed on marketing material so borrowers can see when a broker, aggregator and lender are commercially connected.
How trail commission works, and why it shrinks
Trail is paid monthly on the balance outstanding. As you pay the loan down, the trail payment falls with it. Pay extra, and it falls faster. Sit permanently in offset, and on many lender arrangements it is calculated net of that too.
People often assume trail is a reason a broker would want you carrying debt for as long as possible. The arithmetic does not really support that. Trail on a typical loan is a small monthly amount, and it is dwarfed by the upfront on the next loan. A broker who keeps a client for twenty years across a first home, an upgrade, an investment purchase and two refinances earns far more from that relationship than from protecting a trail payment on a loan that no longer suits the client.
What trail does do, and this is the honest version of the argument, is pay for the part of the job that happens after settlement. Annual reviews, rate negotiations with the existing lender, hardship conversations, construction drawdowns, restructures when circumstances change. None of that is separately billed. Trail is what funds it, and a broker who takes trail and then never answers the phone again is being paid for work they are not doing.
What are the actual commission rates?
Here is where most articles on this subject state a confident number. We are going to be more careful than that, because the published figures disagree with each other.
Ranges circulating in 2026 put upfront commission somewhere between roughly 0.5 and 0.7 per cent of the amount drawn, and trail somewhere between roughly 0.1 and 0.3 per cent a year on the outstanding balance. Different industry sources publish different bands within that spread. The reason they disagree is that there is no single rate. The figure depends on the lender, on the product, on the aggregator agreement the broker operates under, and on the loan type. Two brokers writing the same loan at the same lender can be paid differently.
So any percentage you read on a broker’s website, including a range, is an indication rather than a fact about your loan. The number that applies to your loan is disclosed to you twice, in writing, before you commit to anything:
- The Credit Guide, which you must receive before the broker provides any credit assistance. It sets out how the broker is paid, the commission ranges, the lenders on the panel, and your dispute rights.
- The Credit Proposal, which you receive before an application is lodged. It states the estimated commission on your specific recommended loan, in dollars.
If you want to know what your broker earns on your loan, the answer is on a document you are legally entitled to have in your hand before you sign anything. Ask for both, and read the second one.
Where the money goes after it reaches the broker
Gross commission is not income. Between the lender and the broker sits an aggregator, which provides the lender panel, the software, the compliance framework and the accreditation infrastructure, and which takes a share of every payment or charges a fee for the service.
The MFAA’s Industry Intelligence Service, compiled from aggregator data, publishes national averages for gross broker commission, and is explicit that those figures sit before all costs. Out of gross commission a broker pays aggregator fees, staff wages, premises, professional indemnity insurance, licensing, association membership, software, and their own salary. The headline figure and the take-home figure are not close to each other.
This matters for one reason only. When someone tells you the broker is making thousands of dollars from your loan, they are usually quoting the gross upfront before the aggregator share, before costs, before tax, and before accounting for the files that consume forty hours of work and never settle, which a broker is paid nothing for at all.
Clawback, and why it can affect you even though you never pay it
Clawback is the arrangement under which a lender reclaims the upfront commission if the loan is discharged early, typically within the first twelve to twenty-four months, often in full in year one and partially in year two. The broker returns the money. In most cases the work has long since been done and paid for.
You will never be invoiced by a lender for clawback. It happens between the lender and the broker. But it creates the one live conflict in the whole remuneration structure that borrowers should know about, and it is this: a broker facing a clawback has a financial reason not to recommend the refinance that would be good for you.
Some brokers manage that by charging the client a clawback recovery fee, disclosed in the fine print at the start and invoiced eighteen months later when the client refinances. It is legal, it is disclosed, and it is a genuinely unpleasant surprise for a client who thought the service was free.
The questions worth asking any broker, before you engage them, are short:
- Do you charge a clawback recovery fee if I refinance or sell within two years?
- If it turns out I would be better off refinancing in month eighteen, will you tell me?
- Where in your Credit Guide is that set out?
A broker who works this way answers those in one sentence each. Best Interests Duty already requires that the client’s interests be prioritised where they conflict with the broker’s, and clawback is the textbook example of exactly that conflict. But a duty is easier to comply with when there is no fee sitting on the other side of it.
How the conflict of interest is managed
A broker paid by lenders, recommending between lenders, is an obvious structural conflict. It is not managed by trusting brokers to be nice about it. Four mechanisms sit over the top.
Best Interests Duty
Since 1 January 2021, mortgage brokers providing credit assistance to consumers have owed a Best Interests Duty under Part 3-5A of the National Consumer Credit Protection Act 2009. It came from Recommendation 1.2 of the Hayne Royal Commission, and ASIC Regulatory Guide 273 sets out how compliance is assessed.
The conflict priority rule
Where the broker’s interests and the client’s interests conflict, the client’s must be given priority. A broker cannot recommend the product that pays them more unless that product is also the one that serves the client best. The provision is anti-avoidance drafted, so a broker cannot get a client to sign a document waiving it. There is also no safe harbour, meaning there is no checklist a broker can complete to be deemed compliant. Conduct is assessed against the substantive standard.
Disclosure before the work starts
The Credit Guide and Credit Proposal described above are not optional courtesies. They are required, in writing, in that order, before credit assistance and before lodgement. A borrower who has not received them should ask why.
Industry reform on the structure itself
The Combined Industry Forum package removed the incentive to upsize the loan, moved the industry away from volume and campaign bonuses, capped soft dollar benefits from lenders, and required disclosure of ownership relationships. Those changes were structural rather than behavioural, which is the more durable kind.
One comparison is worth making plainly. Bank staff arranging their own bank’s loans are not subject to Best Interests Duty, because the duty applies to credit assistance in relation to products from more than one credit provider. Bank staff also receive incentives, in the form of salary, bonuses and internal targets, and those are not disclosed to you in a Credit Guide. Neither channel is free of incentives. One of them discloses its incentives and carries a duty to put you first.
What Intellect Finance charges you
Nothing. On any loan type.
No arrangement fee on a home loan, a commercial facility, a corporate transaction, an asset finance contract, an SMSF loan or a personal loan. No fee for complex or specialist lending, which is the usual exception other brokers carve out. No application fee, no consultation fee, no fee if we spend six weeks on a file and it does not proceed.
And no clawback recovery fee. If you refinance or sell inside the clawback window and we lose the upfront commission, that is our problem, not yours. It means that when you ask us in month eighteen whether you should move your loan, you get the answer to your question rather than the answer that protects our position.
We are paid by the lender on settlement, and the amount is disclosed to you in writing before any work begins. Intellect Finance has operated from central Penrith since 2005 under Australian Credit Licence 390611, works with clients Australia-wide, and compares across a panel of more than 100 lenders. If you want the wider case for using a broker at all, including the situations where we would tell you to go direct to your own bank, that sits in our guide on whether a mortgage broker is worth it.
Read Intellect Finance’s Google reviews
Rather than ask you to take our word for it, here are Intellect Finance’s actual Google reviews, pulled live from our Google Business Profile. Read them the way you would read any broker’s reviews, and look for the practical detail rather than the stars.
These reviews reflect other borrowers’ experiences. They are not a promise of any particular outcome for your loan, which will always depend on your own circumstances and the lender’s assessment.
Frequently Asked
Broker commission FAQs
The questions borrowers ask most often about how brokers are paid.
Do I pay a mortgage broker anything?
Not at Intellect Finance, on any loan type. Across the wider market, most brokers are paid by the lender rather than the borrower for standard residential lending, though some charge a fee for complex files or a clawback recovery fee if you refinance early. Whatever the arrangement, it must be disclosed in the Credit Guide before any work begins.
Does using a broker make my interest rate higher?
No. Commission is paid by the lender out of its own acquisition budget, the same budget that funds branches and advertising. It is not added to your rate and it does not appear on your loan. The rate you are offered through a broker is the lender’s rate for your profile.
What is upfront commission calculated on?
On most lender arrangements, the amount actually drawn down at settlement, net of any balance sitting in a linked offset account, measured a set number of days later. It is not calculated on the total approved facility. That change came in from late 2018 following ASIC Report 516 and the Combined Industry Forum reforms.
What is trail commission?
A smaller commission paid monthly by the lender for as long as the loan stays with them, calculated on the balance still outstanding. It falls as you pay the loan down and stops when the loan is discharged or refinanced. It funds the post-settlement work, including annual reviews and rate negotiations.
What is clawback and does it affect me?
Clawback is the lender reclaiming the upfront commission if the loan is discharged early, usually within twelve to twenty-four months. You are never invoiced by the lender for it. It can affect you indirectly, because some brokers charge clients a clawback recovery fee, and because it gives a broker a reason to discourage an early refinance. Intellect Finance charges no clawback fee.
How do I find out what my broker earns on my loan?
Ask for the Credit Guide, which you should receive before any credit assistance and which sets out how the broker is paid, and then the Credit Proposal, which states the estimated commission on your specific recommended loan in dollars before the application is lodged. Both are required in writing.
Are broker commissions a conflict of interest?
Structurally, yes, which is why the framework exists. Best Interests Duty and the conflict priority rule mean a broker cannot recommend a higher paying product unless it also serves the client best, the duty cannot be waived by consent, and commissions are disclosed before work starts. Industry reform also removed volume bonuses and the incentive to write a larger loan.
Are bank staff paid differently from brokers?
Yes. Bank staff arranging their own bank’s loans are paid through salary, bonuses and internal targets, and those incentives are not disclosed to you in a Credit Guide. They also do not owe you Best Interests Duty, because that duty applies to credit assistance across products from more than one credit provider.
The honest bottom line
The interesting thing about broker remuneration is not that it is free to the borrower. Every broker in the country will tell you that, and it is true. The interesting thing is that the two obvious objections to the model, that a broker would want you to borrow more and would want you to stay in debt longer, were both engineered out. Upfront is calculated on what you draw net of offset, so borrowing more than you need pays the broker less. Trail is calculated on what you still owe, so paying down faster reduces it.
What is left is one real conflict, and it is clawback. A broker who stands to lose the upfront if you refinance in month eighteen has a reason not to raise it with you, and a broker who would then invoice you for that loss has two. That is the question worth asking before you engage anyone, and the answer should be in writing. Ask for the Credit Guide. Read the fee section. It takes two minutes and it tells you more about how a broker operates than anything on their website will.
Joseph Sukkar
Joe founded Intellect Finance in Penrith in 2005 and has more than 25 years in Australian finance, across residential, commercial and asset lending. Before founding the brokerage he spent five years as a relationship manager at two Australian banks, which means he has been paid under both models described in this article. Intellect Finance is family-run and charges borrowers no fee on any loan type. More about the team.
Sources
Australian Securities and Investments Commission, Report 516 Review of mortgage broker remuneration, March 2017. asic.gov.au
Australian Securities and Investments Commission, Regulatory Guide 273 Mortgage brokers: Best interests duty. asic.gov.au
Federal Register of Legislation, National Consumer Credit Protection Act 2009, Part 3-5A, best interests obligations and the conflict priority rule. legislation.gov.au
Combined Industry Forum, Improving customer outcomes: the Combined Industry Forum response to ASIC Report 516, November 2017, published via the Australian Banking Association. ausbanking.org.au
Mortgage & Finance Association of Australia, Industry Intelligence Service reports, compiled from aggregator data. Gross commission figures are stated before all business costs. mfaa.com.au
Important disclosures, general advice warning and licensing
General information only. This article is general information only and does not constitute financial, credit, legal or tax advice. It does not take your personal or financial circumstances into account. Before acting on any information here, you should consider whether it is appropriate to your objectives, financial situation and needs.
Commission figures are indicative, not quotes. Commission rates and structures are set by individual lenders and aggregators and vary by lender, product, loan type and aggregator agreement. The ranges described in this article are indications drawn from published industry sources, which do not agree with each other, and are not a statement of what any particular lender pays or what Intellect Finance receives on any particular loan. The figures that apply to your loan are disclosed to you in the Credit Guide and Credit Proposal before an application is lodged.
Clawback and lender policy. Clawback periods, percentages and triggers are set by individual lenders and change from time to time. Descriptions of common market practice in this article are general observations and are not a statement of any particular lender’s or any other broker’s policy.
Best Interests Duty. Best Interests Duty applies to credit regulated under the National Consumer Credit Protection Act 2009, that is, credit provided to consumers for personal, domestic or household purposes, or for the purchase or improvement of residential investment property. It does not apply to business or commercial lending to ABN holders. Where this article describes the duty, it describes it in that regulated consumer credit context.
What we charge you. Nothing, on any loan type. No arrangement fee for residential, commercial, corporate, asset, SMSF or personal lending, no fee for complex or specialist lending, and no clawback recovery fee if a loan is discharged early. Lenders pay us a commission on settlement, which is disclosed to you in writing before any work begins. No broker can guarantee loan approval, and approval timeframes depend on the lender.
About the reviews shown. The reviews displayed on this page are genuine reviews published by clients on Intellect Finance’s Google Business Profile, shown live via a third-party reviews widget. They reflect those individuals’ own experiences and are not a promise of any particular outcome for your loan.
Intellect Finance Pty Ltd holds Australian Credit Licence 390611 and is a member of the MFAA and AFCA. Lending criteria, fees and terms apply. All applications are subject to lender assessment and approval. Article checked 2 September 2026.
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General information only, not financial advice. Commission figures in this article are indicative and vary by lender and aggregator. Your figures are disclosed in the Credit Guide and Credit Proposal before any application is lodged.
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