How Do Mortgage Brokers Get Paid, and Is Their Service Really Free?
How mortgage brokers are paid in Australia — upfront and trail commission from the lender — and what 'free' really means for the borrower.
How do mortgage brokers get paid?
Most mortgage brokers in Australia are paid by the lender, not by you. When your loan settles, the lender typically pays the broker an upfront commission, calculated as a percentage of your loan amount. While the loan stays open — and you keep making repayments — the lender usually pays a smaller ongoing amount too, generally called trail commission, for as long as the loan runs. Brokers must give you information about the commissions they may receive as part of this arrangement (MoneySmart’s guide to using a mortgage broker, ASIC, as at July 2026).
Because the payment comes from the lender’s side of the transaction, most borrowers don’t receive a separate bill from their broker for arranging a standard home loan. That’s the source of the “free” claim you’ll see on broker websites — and it’s broadly true of how the cash moves, even if the word “free” oversimplifies what’s actually happening.
What is a mortgage broker, exactly?
A mortgage broker is a credit licensee (or a representative of one) who compares home loan products across a panel of lenders and helps you apply, rather than working for a single bank. They earn their living from the lenders whose products they arrange, not — in the typical case — from a fee charged directly to you.
So is a mortgage broker’s service actually free?
Not quite, and the nuance matters. You generally don’t hand over cash for standard broking services, so there’s no line item on your settlement statement that says “broker fee.” But commission isn’t conjured out of nowhere — it’s a cost lenders factor into how they price and distribute their loans generally, in the same way a retailer factors a sales commission into its overheads. The service is free to you in the direct sense; it isn’t costless to the system that delivers it.
| Payment model | Who pays | When it’s paid |
|---|---|---|
| Lender-paid commission (typical) | The lender | Upfront at settlement, then trail over the loan term |
| Fee-for-service (less common) | You, the borrower | An agreed fee, disclosed before you engage |
A small number of brokers charge a fee-for-service instead of, or alongside, lender commission — usually for more complex lending scenarios. If a broker proposes this, it should be disclosed to you upfront and in writing before you agree to anything.
Does commission change which loan a broker recommends?
Commission rates can vary between lenders and between products, which is one reason the industry has rules around disclosure and conduct. Since 1 January 2021, brokers have owed a best interests duty under Part 3-5A of the National Consumer Credit Protection Act 2009: when providing credit assistance on a regulated credit product, a broker must act in the consumer’s best interests and prioritise those interests over their own where they conflict — including over which product pays the broker the most commission (ASIC’s best interests duty guidance for mortgage brokers, RG 273, as at July 2026).
Does using a broker cost more than going directly to a lender?
Some borrowers wonder whether approaching a bank directly, instead of using a broker, changes what they ultimately pay. That’s a separate comparison with its own set of trade-offs — panel breadth, the time a broker can save you, and whether a direct-to-lender deal might come with its own discount — and it deserves its own dedicated look rather than a quick answer here.
What should I ask a broker about how they’re paid?
Before you engage a broker, it’s reasonable to ask which lenders are on their panel, whether commission rates differ across those lenders, and whether they’d ever charge you a fee directly. A broker operating under Australia’s credit licensing framework should be able to answer all three without hesitation.
Whether a commission-based broker or a fee-for-service arrangement suits you better depends on your borrowing situation and how much you value having someone compare the market on your behalf. A licensed mortgage broker or financial adviser can walk you through how they’re remunerated before you commit to anything.
If you’re still building toward a deposit before any of this becomes relevant, our guide to how much deposit you need for a first home in Australia covers the paths first home buyers commonly take.
General information only — see the disclaimer below. This article does not constitute financial or credit advice.
