Is a mortgage broker free? How brokers get paid

Most mortgage brokers are paid by the lender, not by you. When your home loan settles, the lender pays the broker an upfront commission of about 0.65% to 0.70% of the amount you draw down. After that it pays an ongoing trail commission of around 0.15% a year while the loan stays open, according to the Mortgage and Finance Association of Australia (MFAA). A broker can charge you a fee as well, but only if they give you a written quote first and you sign it.

So a mortgage broker is usually free to you in the sense that you pay no direct fee. What you should still check is how the broker is paid on your loan, which lenders they use and why they recommend the one they do.

How mortgage brokers get paid

A mortgage broker is paid in 3 possible ways, and the law sets rules for each.

Payment	Who pays	How much	Rules that apply
Upfront commission	The lender, after settlement	Generally 0.65% to 0.70% of the amount drawn, net of any offset balance	Calculated on the drawn amount, not the loan limit, since 1 January 2021
Trail commission	The lender, yearly for the life of the loan	Generally 0.15% of the outstanding balance, net of offset	Stops if the loan is in default or more than 90 days in arrears, or when you leave the lender
Fee paid by you	You, directly	Set by the broker, no standard amount	You must sign a written quote before the broker provides the service

Sources: MFAA broker remuneration fact sheet, National Consumer Credit Protection Regulations 2010, regulations 28VB to 28VG, Moneysmart.

The MFAA, the mortgage broking industry body, says commission rates are highly standardised across the Australian market. Its worked example excludes GST. The commission is paid to the broking business, which uses it to cover costs such as aggregator fees, staff, insurance and regulatory fees before the broker is paid.

What commission looks like on a real loan

Mortgage broker commission is easiest to understand with numbers. The MFAA’s fact sheet works through a $700,000 loan at a 0.65% upfront rate. With no money in an offset account, the upfront commission is $4,550. If the borrower has $75,000 in an offset account, the commission is worked out on $625,000 instead, so it falls to $4,062.50.

The same maths on a $600,000 Perth home loan:

• Upfront commission at 0.65%: $3,900, or $3,575 if you hold $50,000 in an offset account when the loan is drawn.
• Trail commission at 0.15%: about $900 in the first year on a $600,000 balance, falling as you pay the loan down or build up your offset.

These are payments from the lender to the broking business, not fees you pay directly, as Moneysmart explains. You can ask for your broker’s exact figures, because the law requires them to disclose their commission.

Clawback: why loan length matters to brokers

Lenders can take back, or claw back, some or all of a mortgage broker’s upfront commission if your loan is repaid or refinanced soon after settlement. The MFAA says clawback applies if a loan is discharged within 18 months to 2 years of settlement.

The law limits clawback in 2 ways (National Credit Regulations, regulation 28VG):

• A clawback cannot apply for more than 2 years after the loan is first drawn.
• You, the borrower, cannot be made to pay an amount because the broker’s commission was clawed back.

If a broker’s paperwork asks you to cover a clawback, or charges an early exit fee to make up for one, ask why and check it against that rule before you sign.

When a mortgage broker can charge you a fee

A mortgage broker can charge you directly, but the law sets 3 conditions. Moneysmart says a broker who charges a fee should set it out in a written quote. You must sign the quote before the broker provides services and asks for payment, and a broker cannot ask for the fee before providing the service (Moneysmart).

Broker pages in our research say fees are more common on complex or very small loans, where commission may not cover the work. There is no standard fee, so Moneysmart suggests checking what other brokers charge for similar work. If the loan is for a business rather than a home or residential investment, the best interests duty does not apply: see commercial loans vs home loans.

What your broker must tell you about payment

A mortgage broker must disclose upfront and trail commissions in writing, at set points. That is the law, not a courtesy. According to the Australian Securities and Investments Commission (ASIC), a broker must give you 3 documents:

• A credit guide early on. It describes the fees and commissions that may be payable, and lists the 6 lenders the broker does the most business with.
• A quote, only if you will pay a fee. You must sign and date it before the broker provides credit assistance.
• A proposal document when they recommend a loan. It sets out any fees you pay and a reasonable estimate of the commission the broker will receive.

The credit guide’s list of 6 lenders is worth reading. It shows where the broker’s business is concentrated, which you can compare against the lender’s panel they say they use.

Does commission bias the advice?

Commission can create a conflict of interest, and the law deals with it directly. Since 1 January 2021, a mortgage broker must act in your best interests when giving credit assistance. When there is a conflict with their own interests, they must give priority to yours (National Consumer Credit Protection Act, sections 158LA and 158LB). The best interests duty applies to home loans and residential investment loans, according to ASIC’s guidance.

The same reforms changed how commission works. The Banking Royal Commission recommended that borrowers, not lenders, pay brokers. The Government adopted an alternative instead, according to Treasury: upfront commission linked to the amount drawn down, a ban on volume-based and campaign-based commissions, and limits on clawback. Those rules took effect on 1 January 2021.

In practice, Moneysmart says a broker should show you more than one loan option and explain why each is in your best interests. Ask for a lower-cost option as well.

Questions to ask a broker about cost

Ask a mortgage broker these 5 questions before you commit, and get the answers in writing:

• How are you paid on this loan, and how much upfront and trail commission will you receive?
• Will I pay you any fee, now or later?
• Which 6 lenders do you do the most business with?
• Why is this loan in my best interests, and can you show me a lower-cost option?
• What fees will I pay the lender on this loan?

Our guide to questions to ask a mortgage broker has a full checklist, and mortgage broker vs bank compares the 2 routes.

Finding a broker in Perth

434 businesses are listed in our Perth mortgage broker directory. Before you share your documents, check the broker’s credit licence on ASIC’s Professional Registers, as Moneysmart recommends. If you are one of the first home buyers using a broker for the first time, see what to expect from a first mortgage broker appointment.

Checked against the MFAA, the National Consumer Credit Protection Act and Regulations, ASIC, Moneysmart and Treasury on 26 September 2026. This is general information, not financial advice. It does not consider your objectives, financial situation or needs.

Frequently asked questions

Is a mortgage broker free?

A mortgage broker is usually free to you because the lender pays the broker’s commission when your home loan settles. The MFAA says upfront commission is generally 0.65% to 0.70% of the amount drawn, with trail of around 0.15% a year. A broker can also charge a fee, but only after you sign a written quote.

How much commission does a mortgage broker get?

Upfront commission is generally 0.65% to 0.70% of the amount you draw down, net of any offset balance, according to the MFAA. On a $600,000 loan at 0.65%, that is $3,900. Trail commission is generally 0.15% a year of the outstanding balance, or about $900 in the first year.

Do mortgage brokers charge a fee?

Most home loan brokers do not charge you a fee, but some do, and Moneysmart sets out 3 conditions. A broker who charges must give you a written quote, you must sign it before they provide services, and they cannot ask for payment before providing the service, according to Moneysmart.

What is trail commission?

Trail commissions are ongoing payments from the lender to the broker for the life of the loan, generally around 0.15% a year of your outstanding balance, net of any offset. The MFAA says trail stops if the loan is in default or more than 90 days in arrears.

Can a broker charge me if I refinance early?

A lender can claw back a broker’s commission if you repay or refinance within 2 years, but the National Credit Regulations say you cannot be made to pay an amount because of that clawback. Check any early exit fee in your broker’s paperwork against this rule.

Does commission affect which loan a broker recommends?

Commission can create a conflict of interest, so the law requires a mortgage broker to act in your best interests and put your interests first when there is a conflict. Volume-based and campaign-based commissions have been banned since 1 January 2021.