How mortgage brokers get paid, and what to ask about commissions

Understanding how mortgage brokers get paid helps explain why the service is usually free to you, and it also gives you a useful lens for asking sharper questions before you commit to a lender.

The two-part commission structure

Most brokers in Australia are paid through a combination of upfront and trail commission, both funded by the lender rather than the borrower.

Upfront commission is paid once your loan settles, typically calculated as a percentage of the loan amount. Trail commission is smaller but ongoing, paid periodically for as long as the loan remains active with that lender and you continue meeting repayments. This structure is part of why many brokers are motivated to recommend a loan that suits you long term, since a loan that gets refinanced away quickly cuts their trail income short.

Why the structure matters to you

Commission rates are not identical across every lender or every loan product, which is exactly why the questions below are worth asking. A broker recommending one lender over another should be able to explain the reasoning in terms of your situation: interest rate, fees, approval likelihood, flexibility, or loan features, not simply which one pays more.

This is also where best interests duty comes in. Brokers are legally required to prioritise your circumstances over their own commission when they make a recommendation, and to disclose how they are paid so you can weigh the advice accordingly.

Commission structure at a glance

Commission type	Paid by	Paid when	What it can tell you
Upfront commission	Lender	At settlement	One-off, does not usually vary much by lender
Trail commission	Lender	Ongoing while loan is active	Rewards long-term suitability over a quick switch
Client fee (uncommon)	You, if agreed	Before or during the process	Usually only for complex or non-standard applications

Questions that surface any conflict early

A short, direct conversation about pay tends to clear up most concerns quickly. Consider asking:

• What commission do you earn on the loan you are recommending, roughly?
• Does that commission differ much from other lenders on your panel?
• If I refinance away from this lender in two years, does that affect you?
• Have you recommended this lender to other clients in a similar situation to mine, and why?

A broker who answers plainly, without deflecting, is generally demonstrating the transparency the regulations expect. Reluctance to discuss commission at all is worth following up on before you proceed.

The common complaint worth watching for

Across broker reviews, the recurring concerns are less about commission itself and more about brokers who go quiet during the process, respond slowly, or add costs that were not flagged early. Those issues usually trace back to communication, not the commission structure. Asking about fees and commission upfront, and getting it in writing, reduces the chance of a nasty surprise later. If a broker relationship does turn sour, our guide on what to do if you are not happy with your broker’s advice covers the next steps.

Why commission alone rarely explains a bad experience

It is tempting to assume that a poor experience with a broker traces back to how they are paid, but the review patterns across the industry tell a different story. The recurring praise points to responsiveness, clear explanations and proactive communication, while the recurring complaints point to the opposite: slow replies, unreturned calls, and a lack of follow-up. Commission structure barely features either way. This suggests that vetting a broker on service quality and communication style matters at least as much as understanding their pay, even though both are worth knowing before you commit.

Clawback and why it can matter to you indirectly

Most lender agreements include a clawback provision, meaning the broker has to repay some or all of their upfront commission if a loan is repaid or refinanced away within a set period, often the first one or two years. This is worth knowing because it explains why some brokers are cautious about recommending a loan they suspect you might refinance out of quickly, and it is a reasonable thing to ask about if you already know you might sell or refinance sooner than usual.

This is general information about how mortgage broker pay typically works in Australia, not personal financial advice. Confirm the specific commission and fee arrangement with your broker before signing anything.

If you want to compare how different local brokers structure their fees and panels, our scoring method explains what we look at, and you can browse options from the home page to start comparing.