How mortgage brokers get paid and what it means for you — 2026 AU guide

Mortgage brokers in Australia are typically paid by lenders through upfront and trailing commissions, meaning you usually pay nothing directly out of pocket. Understanding how this payment model works helps you choose a broker whose incentives are aligned with your best interests.

The basics: who actually pays your mortgage broker?

In Australia, the vast majority of mortgage brokers are paid by the lender you ultimately borrow from — not by you. This is the fundamental reality of the industry that trips up many first-home buyers and refinancers alike.

When you settle on a home loan, the lender pays the broker a commission for sourcing your business. This model has been the backbone of the mortgage broking industry for decades and it's why you can walk into a broker's office, receive hours of tailored advice, and leave without handing over a single dollar.

According to the Mortgage & Finance Association of Australia (MFAA), broker-originated loans now account for over 74% of all new residential mortgages written in Australia — a record-high share that reflects just how mainstream the broker model has become. The system is regulated by the Australian Securities and Investments Commission (ASIC) and, since 2021, brokers have been held to a "best interests duty," legally requiring them to prioritise your needs over the lender's or their own.

That said, commission-based pay structures aren't without complexity. Knowing the details puts you firmly in the driver's seat.

Upfront commissions: the first payment

When your loan settles, the lender pays your broker an upfront commission. This is a one-time payment calculated as a percentage of the loan amount.

Typical upfront commissions in 2026 sit between 0.55% and 0.70% of the loan value (excluding GST). On a $650,000 mortgage, that equates to roughly $3,575 to $4,550 paid directly from the lender to the broker. You don't see this money leave your account — it's a cost absorbed by the lender within their overall product pricing.

Different lenders offer different upfront rates, which is one reason transparency matters. A broker working purely to maximise their upfront payment might theoretically steer you toward a higher-rate lender. This is exactly the conflict-of-interest risk the best interests duty and ASIC's ongoing surveillance are designed to prevent.

Some lenders also pay volume bonuses — additional incentives for brokers who send above a certain number of loans. ASIC has flagged these arrangements as an ongoing area of scrutiny, so it's worth asking your broker directly whether they receive any volume-based incentives.

Trail commissions: the ongoing payment

Beyond the upfront payment, most lenders pay a trail commission — a smaller, ongoing percentage of your outstanding loan balance paid monthly or quarterly for the life of the loan.

Trail commissions generally range from 0.10% to 0.35% per annum of the remaining loan balance. On that same $650,000 loan, a trail of 0.15% p.a. would generate around $975 per year for your broker initially, declining as you pay down the principal.

The intent of trail commissions is positive in theory: they incentivise brokers to maintain a relationship with you, ensure your loan remains competitive, and prompt them to reach out when better deals emerge. A good broker uses trail income as motivation to conduct regular loan health checks and alert you when it's time to refinance.

The risk, however, is the opposite scenario — a broker who collects trail income passively without ever following up. This is sometimes called "trail book complacency." If you haven't heard from your broker in 18 months and your interest rate hasn't been reviewed, that's a red flag worth acting on.

Fee-for-service brokers: the alternative model

A small but growing segment of the Australian market uses a fee-for-service model, where you pay the broker directly rather than relying on lender commissions. These brokers may rebate some or all commissions back to you, charging a flat fee or hourly rate instead.

This model appeals to borrowers who want full transparency and no commission influence whatsoever. The trade-off is an upfront cost — typically between $990 and $3,500 depending on loan complexity — that you pay regardless of whether you end up settling a loan.

For a straightforward purchase, a commission-based broker subject to best interests duty often delivers equivalent outcomes at no direct cost to you. Fee-for-service may be better suited to complex situations — self-employed borrowers, property investors with multiple securities, or those with unusual income structures — where independent, unbiased guidance is worth the premium.

Comparing your options: broker payment models in 2026

*All figures are indicative 2026 AUD estimates. Actual rates vary by broker, lender, and loan complexity.*

For a deeper breakdown of what you might expect to pay, see our cost guide.

What the best interests duty means for you

Since 1 January 2021, Australian mortgage brokers have been legally obligated to act in your best interests — not the lender's, and not their own. This duty, introduced under the Treasury Laws Amendment (Putting Consumers First — Establishment of the Australian Financial Complaints Authority) framework, was a landmark shift for the industry.

In practical terms, this means your broker must:

- Recommend the loan that genuinely suits your circumstances, not just any loan they can place - Disclose commissions and any conflicts of interest clearly - Document why a particular product was recommended - Prioritise your financial outcomes even when it conflicts with maximising their own commission

APRA's 2025 industry review noted that compliance with best interests obligations has strengthened significantly, with broker documentation quality improving across the sector. If you ever feel a recommendation doesn't serve your interests, you can lodge a complaint with the Australian Financial Complaints Authority (AFCA) at no cost.

When researching your options, our methodology explains how we evaluate brokers against these obligations.

Questions to ask your broker before you commit

Knowing how brokers are paid gives you the power to ask sharper questions. Before you engage anyone, consider asking:

1. "Which lenders are on your panel?" — A broker with access to 30+ lenders will typically find more competitive options than one tied to a panel of five. 2. "What commission will you receive from the recommended lender?" — They are legally required to disclose this. 3. "Do you receive any volume bonuses or soft-dollar benefits from any lender?" — Soft-dollar benefits include things like conferences, marketing support, and gifts. 4. "How often will you review my loan after settlement?" — A quality broker should contact you at least annually. 5. "Are you credit-licensed or operating as a credit representative?" — Both are legal, but understanding the structure clarifies accountability.

If you're looking for vetted professionals already screened for these criteria, browse our list of best mortgage brokers in Sydney as a starting point.

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