What Is a Mortgage Broker and How Do They Actually Get Paid?

More than 70% of Australian home loans are now arranged by mortgage brokers — but a lot of borrowers still don't fully understand what a broker does, how they're paid, or whether using one costs them anything.

Here's a clear, honest answer.

What a Mortgage Broker Actually Does

A mortgage broker is a licensed credit professional who:

• Assesses your financial situation and goals
• Compares loan products across multiple lenders (typically 20–40+)
• Recommends the most suitable option based on your needs
• Handles the application paperwork and lender liaison
• Manages the process through to settlement

Brokers must hold a credit licence (or operate as a representative of a licensed group) and meet ongoing professional standards.

How Mortgage Brokers Get Paid

For 99% of standard home loans, the borrower pays nothing directly to the broker. Instead, brokers are paid by the lender on settlement. There are two parts to the payment:

1. Upfront Commission

Typically 0.65–0.75% of the loan amount, paid by the lender at settlement. On a $600,000 loan, that's around $4,000.

2. Trail Commission

An ongoing payment of approximately 0.15–0.20% per year of the remaining loan balance, paid for as long as the loan is active. On a $600,000 loan, that's about $1,000/year.

Does Commission Affect Your Rate?

No. Lenders price loans the same whether you go through a broker or apply directly. Commission is a customer acquisition cost the lender pays out of their existing margin — not added to your rate.

The Best-Interest Duty

Since 2021, mortgage brokers have been legally required by Australian law to act in your best interest — not just recommend a "not unsuitable" loan. This means:

• The broker must consider rate, fees, features, and your specific needs
• Recommendations must be the best available option for you, not just the easiest sale
• If a broker recommends a higher-commission product over a better one, they breach their licence

What Brokers Can't Do

• They can't lend money themselves — they connect you with a lender
• They don't have access to every lender — each broker has a "panel" of lenders they work with
• They can't guarantee approval — that's the lender's decision

Why Most People Use Brokers Now

• Time saved — One application instead of approaching multiple lenders separately
• Wider lender access — Brokers have access to non-bank lenders many borrowers don't know exist
• Specialist matching — A broker who handles self-employed or low-doc loans daily knows which lender to approach
• No cost to borrower — In standard residential lending
• Best-interest duty — Legal protection that doesn't apply when going direct to a bank

When You Might Pay a Broker Directly

For most home loans you won't pay a thing. But some specialist or commercial loans involve a broker fee — typically only when the loan structure is unusual (commercial property, complex business lending, or extremely low loan amounts where commission alone doesn't cover the work).

This must be disclosed in writing before you commit.

How to Choose a Broker

• Check they hold an active credit licence (or are a credit representative)
• Ask how many lenders they have on their panel
• Ask which lenders they've placed loans with recently
• Confirm they're a member of the MFAA or FBAA (industry bodies)
• Get clarity on fees upfront