Does it cost anything to use a Mortgage Broker?
Written by Kim Skilton | Mortgage Broker
In this Article:
How does a mortgage broker get paid
How does the commission work
Will I be told how much commission is paid
Are there ever fees that I do pay
What is Best Interests Duty
How do I know I can trust the recommendation
How does a Mortgage Broker get paid?
The short answer: in most cases, using a mortgage broker costs you nothing. We are paid by the lender when your loan settles, and not by you. If that surprises you, you're not alone. It's probably the single most common question I get before a first meeting, and it's a fair one. You should always know how your adviser is paid.
Mortgage brokers in Australia operate on a commission model. When we help you find and settle a home loan, the lender pays us for the business we bring to them. From the lender's perspective, using a broker is more efficient than running their own large sales force so they're happy to pay for the introduction.
This means the service you receive, finding the right loan, comparing products across a wide lender panel, handling paperwork, liaising with the bank, and guiding you through to settlement is provided to you at no direct cost.
There are some limited circumstances where a fee may apply (more on that below), but for the vast majority of home loans, you won't pay your broker a cent.
So how does the commission work?
There are two types of commission a broker may receive:
Upfront commission
This is paid by the lender once your loan settles. It's calculated as a percentage of the total loan amount and typically sits between 0.55% and 0.70% of the loan value (before GST), though this varies by lender and loan type.
The lender pays this directly to the brokerage meaning you are not charged to benefit from the services offered by Maison Mortgages.
Trail commission
In addition to the upfront payment, most lenders also pay a trail commission. Trail commission is the lender's way of incentivising brokers to maintain an ongoing relationship with clients and ensure the loan continues to perform. It's also why a good broker will check in with you periodically to make sure your loan is still competitive.
Will I be told how much commission is paid?
Yes you will, and this is a legal requirement, not just courtesy. Under Australian credit law, your broker must provide you with a Credit Proposal Disclosure document before or when credit assistance is given. This document sets out:
The loan being recommended and why
The commissions the broker expects to receive from the lender
Any other fees or benefits received in connection with your loan
You are entitled to see this information and to ask questions about it. At Maison Mortgages, I'll walk you through the disclosure clearly.
Are there ever fees that I do pay?
In most residential home loan situations: no. But there are a small number of scenarios where a broker fee may apply:
Complex or specialist applications
If your situation is unusually complex and requires significantly more time may be required to structure and place the loan. In these cases, we may charge a fee for the additional work involved.
If a fee applies to your situation, it will always be disclosed to you clearly before any work begins. You will never receive a bill you weren't expecting.
Clawback situations
This one catches people off guard occasionally. If you refinance or pay out your loan within approximately 18 to 24 months of settlement (the exact period varies by lender), the lender may claw back some or all of the upfront commission they paid to your broker.
In these cases, some brokers reserve the right to recover that clawback from you. At Maison Mortgages, this is disclosed in my Terms and Conditions before we begin so there are no surprises. It's worth being aware of if you're considering a short-term loan arrangement.
What is Best Interests Duty - and why does it matter?
Since 2021, mortgage brokers in Australia have been required to act in the best interests of their clients under the Best Interests Duty (BID) - a legal obligation under the National Consumer Credit Protection Act.
In plain terms, this means I must recommend the loan that is genuinely right for your situation, not the one that earns me the highest commission. If two products are otherwise comparable, I must recommend the one that is better for you, even if it pays me less.
This is an important distinction from the old model. The commission structure hasn't changed, but the legal accountability around how recommendations are made has. It's one of the reasons the broking industry has become an increasingly trusted first port of call for Australian borrowers with over 70% of new home loans are now arranged through brokers.
How do I know I can trust the recommendation?
A few things to look for when working with any broker:
Do they clearly explain the commission they'll receive before you commit to anything?
Are they recommending from a broad lender panel and not just one or two familiar names?
Are they explaining why this loan suits your situation, not just what the rate is?
If something doesn't feel right, you also have recourse. Complaints about a mortgage broker's conduct can be made to the Australian Financial Complaints Authority (AFCA) at afca.org.au, free of charge.
Ready to find out what I can do for you? Book a free, no-obligation call with Maison Mortgages. I'll explain exactly what I can access on your behalf and what the process looks like from here using our simple 5 Step Haven Settlement Success process.
The information contained within this page is general in nature. It serves as a guide only and does not take into account your personal financial needs. Before you act on this information you should seek independent legal and financial advice.