BROKER COMMISSION • AUSTRALIA
How Mortgage Brokers Get Paid in Australia
Australian mortgage brokers are generally paid by lenders through upfront commission and trail commission. This guide explains the money flow, typical current commission ranges, clawback, direct broker fees, disclosure and how Best Interests Duty deals with conflicts.
Lender-paid commissionUpfront + trail explainedClawback explainedBest Interests Duty
General information only. Actual remuneration is governed by your broker’s disclosure documents and lender arrangements.
THE MONEY FLOW
Who pays whom when a mortgage broker arranges a home loan?
Moneysmart says lenders generally pay mortgage brokers commission for distributing their products, so consumers usually do not pay the broker directly.
You choose a loan
The broker provides credit assistance and helps with the application. The lender still makes the credit decision.
The loan settles
If the lender pays commission, the upfront component is generally triggered after settlement.
Trail may continue
An ongoing trail payment may be paid while the loan remains outstanding and meets the lender’s conditions.
UPFRONT, TRAIL & CLAWBACK
The three commission concepts every borrower should understand.
MFAA’s current public remuneration guide provides a useful industry benchmark. These are typical ranges, not lender-specific quotes.
| Component | Current MFAA guide | Calculation base | What it means |
|---|---|---|---|
| Upfront commission | Generally 0.65%–0.70% excluding GST | Drawn loan amount | One-off revenue paid after settlement |
| Trail commission | Generally around 0.15% excluding GST | Outstanding loan balance | Ongoing revenue while the loan qualifies |
| Clawback | Commonly roughly 18 months–2 years | Part or all of upfront commission | Lender may reclaim commission from the broker after early discharge |
Commission is business revenue, not take-home pay
MFAA notes that commission funds the broking business and its costs; it is not equivalent to the individual broker’s personal income.
BEST INTERESTS & CONFLICTS
What stops commission from becoming the only reason a lender is recommended?
ASIC RG 273 explains that mortgage brokers must act in the consumer’s best interests and prioritise the consumer where a conflict exists.
Best Interests Duty
The recommendation must be in the consumer’s best interests.
Conflict priority
Where interests conflict, the consumer’s interests must be prioritised.
Explain the recommendation
A strong comparison should show why the lender, product and structure fit better than credible alternatives.
DISCLOSURE
What should you ask to see in writing?
Moneysmart says brokers must provide information about commissions they may receive.
Direct broker fee
If the broker charges you directly, ask for the written quote, scope and payment terms.
Lender-paid remuneration
Ask the broker to explain expected upfront and trail remuneration for the recommended lender.
Recommendation rationale
Ask why the selected lender fits better than credible alternatives, including policy, pricing, fees and features.
Does commission automatically make the rate higher?
No universal rule says a broker-submitted loan must cost more. Compare the actual rate, fees, features and total cost available to you.
AUTHORITATIVE SOURCES
Where the commission and duty explanations come from.
Use these sources to go deeper.
Moneysmart
Consumer guidance on what brokers do, how they are paid, direct broker fees and questions to ask. Read Moneysmart.
ASIC RG 273
ASIC guidance on mortgage-broker Best Interests Duty and prioritising the consumer where conflicts exist. Read ASIC.
MFAA remuneration guide
Industry explanation of upfront commission, trail and clawback, including current typical commission ranges. Read MFAA.
BROKER TRANSPARENCY CLUSTER
Separate commission, direct fees and broker-vs-bank choice.
Each page owns one question.
Free Mortgage Broker
See what no broker fee means on standard residential loans.
Open service →Mortgage Broker Fees
Separate direct broker fees from lender and third-party costs.
Open fees guide →Mortgage Broker vs Bank
Compare the broker route with dealing directly with one lender.
Compare paths →
YOUR BROKER
Clear disclosure, policy-first comparison and a recommendation that can be explained.
David Warburton combines commercial-banking experience with mortgage broking and a 35+ lender broker panel. Rate Challenge also maintains a broader 100+ lender rate dataset for market context.
BROKER COMMISSION FAQS
Common questions about broker pay.
Who pays a mortgage broker in Australia?
Lenders generally pay mortgage brokers commission. A broker can also charge a direct fee in some circumstances.
What is upfront commission?
MFAA says it is commonly around 0.65%–0.70% of the drawn loan amount, excluding GST.
What is trail commission?
MFAA says trail is generally around 0.15% of the outstanding loan balance, excluding GST.
What is commission clawback?
If a loan is discharged early, the lender may reclaim some or all upfront commission. MFAA says brokers cannot pass this clawback cost on to clients.
Do different lenders pay different commission?
Arrangements can vary. That is why disclosure, Best Interests Duty and recommendation reasoning matter.
Does broker commission increase my rate?
Not automatically. Compare actual pricing and total costs.
Can a broker charge me directly too?
Yes, some brokers or specialist scenarios can involve a direct fee. It should be disclosed clearly.
How can I test whether commission influenced the recommendation?
Ask for credible alternatives, policy/cost differences, expected remuneration and why the recommendation is in your best interests.
Understand the money before you judge the recommendation.
Check disclosure, lender policy, total cost and the reasons behind the recommended structure.