How mortgage brokers get paid

Who pays the broker?

The lender. The MFAA's broker remuneration factsheet describes the commission as a share of the economic value the lender expects to earn from the loan, paid when the broker originates it, and Moneysmart says the same in plainer words: lenders generally pay brokers a commission for distributing their products, so you do not pay them directly. The lender funds it from its own margin, which is why the ACCC's home loan price inquiry found broker customers generally receive equal or better pricing than direct customers, and why the same loan carries the same rate and fees whether you apply through a broker or a branch. Brokers are required by the National Consumer Credit Protection Act to disclose how their commission is structured and the percentage, which is what the credit guide they give you does; ours sets out how our broker partner is paid and the referral fee it pays us.

Upfront and trail: the two commissions

Two details in that table do the real work. Upfront is paid on what you draw net of offset, a change made with the 2021 reforms so a broker earns nothing extra by writing a bigger facility you park in offset. And trail runs on the balance, so it falls every year as you repay and stops if the loan goes bad, which is the argument the industry made for keeping it: a broker is paid to keep you in a loan that performs.

What the lenders actually pay

Aggregators publish their commission schedules to their brokers, and Yellow Brick Road's aggregation commission policy dated 3 July 2024 is on the open web. Rates are shown including GST, so 0.715% is the MFAA's 0.65% plus GST. Checked on 20 September 2026; rates change and the policy notes several "up to" figures.

The spread is narrow: the four majors and Macquarie all pay the same headline upfront, which is what the MFAA means by "highly standardised". The differences are in trail shape (NAB steps up over five years) and clawback length (12 months at the majors, 18 at Macquarie). Commercial and business lending is a different market, and the same policy shows commercial rates from 0.55% up to 2.00% at some specialist lenders; the business loan broker guide covers it.

A worked example

The MFAA's own example: a broker arranges a 30-year, $700,000 home loan at a 0.65% upfront rate excluding GST. With no offset balance the upfront commission is $700,000 × 0.65% = $4,550. If the borrower holds $75,000 in an offset account, upfront is calculated on $625,000 and comes to $4,062.50. Trail at 0.15% on $700,000 is $1,050 in the first year and less each year after. From that revenue the broking business pays its aggregator fees, staff, rent, ASIC, AFCA and compensation scheme levies, insurance, software and any clawbacks before the broker draws an income, and the factsheet notes payment can arrive up to 90 days after settlement. Mozo's ladder gives the same arithmetic at other sizes: about $2,200 to $2,600 upfront on $400,000, $3,300 to $3,900 on $600,000 and $4,400 to $5,200 on $800,000.

Clawback, and why your broker asks about your plans

If you refinance or pay out the loan early, the lender has not earned back the upfront it paid and takes it back from the broker. The MFAA factsheet puts the window at 18 months to two years; the aggregator policy shows 100% clawback inside 12 months at ANZ and NAB; Mozo publishes the common schedule of 100% within 12 months, 50% at 12 to 18 months and 25% at 18 to 24 months, and notes a federal cap of two years. The factsheet is explicit that a broker cannot recoup any clawback from the client, and Mozo adds that a clawback recovery fee charged after the fact would likely breach the National Credit Act unless a fee-for-service was disclosed in writing before work began. The practical effect is that a good broker will ask whether you expect to sell or refinance within two years, and will tell you if a loan you are asking for is likely to cost them their commission. The refinancing guide covers the two-year window from the borrower's side.

What the Royal Commission changed, and did not

The 2019 Royal Commission recommended that borrowers, not lenders, pay brokers, and that trail commission be abolished. Neither happened. What Parliament enacted instead, effective 1 January 2021, was a best interests duty for brokers, a conflict priority rule requiring the broker to put your interests first where theirs conflict, and a ban on conflicted remuneration, which caught volume-based and campaign-based commissions and soft-dollar benefits. Upfront commission was also tied to the amount drawn net of offset. The remaining upfront-and-trail structure was reviewed by Treasury in 2022 and kept. The fees and best interests duty guide explains what the duty obliges a broker to do on your file.

Does the commission steer the recommendation?

Structurally, less than it could. The majors pay the same upfront, so switching a borrower between them earns the broker nothing; Mozo works the theoretical gap between a 0.55% and a 0.65% lender out to $600 on a $600,000 loan, and Emu Money's guide to the duty notes that most breaches trace back to commissions or narrow panels used without documenting why excluded lenders were unsuitable. The safeguards are the duty and the paper trail: the MFAA reports brokers present an average of three loan options and are accredited with an average of 23 lenders, and Moneysmart's scripted questions are the ones to ask, "How do you get paid for this advice, and does it differ between lenders?" and "Why is this loan in my best interests?" Your Finance Guide refers you to one licensed broker partner and is paid a referral fee out of that partner's commission, disclosed in our credit guide; we do not lend or recommend loans ourselves.