How mortgage brokers are paid
This is a great question—and one we’re asked all the time, even by friends and family. It’s also an important topic that should be addressed early in any conversation.
When a mortgage broker submits an application to a lender and the loan settles, the lender pays a commission based on the size of the loan. This commission is paid to an aggregator, who then pays the mortgage broker.
Commission structure
Lenders typically pay commission in two parts:
- Upfront commission:
Paid after the loan has settled. Mortgage brokers generally receive this payment within 4–6 weeks of settlement. - Trail commission:
Paid monthly for the life of the loan. This ongoing payment is calculated based on the remaining loan balance.
Does using a broker cost more?
No. As a client, you are not charged a higher interest rate or additional fees for using a mortgage broker.
The interest rates, fees, and charges applied to your home loan are set by the lender and are the same whether you use a broker or go directly to the lender.
Additional Fees
Mortgage brokers typically operate their own independent businesses. Some brokers may charge clients a fee, while others do not, we generally DO NOT charge our clients fees.
If a broker intends to charge a fee, they must provide you with a Credit Guide before conducting any business. This document outlines their services, fees, and obligations. (For example, our Credit Guide is available on our website: www.vanquishgroup.com.au.)
Once the broker has assessed that they can assist you, they must provide a Credit Quote. This document details any fees payable, allowing you to decide whether to proceed.
Disclosure Requirements
Mortgage brokers are legally required to disclose all forms of remuneration, including:
- Commissions
- Bonuses
- Receiving referral fees (if applicable)
- Paying referral fees (if applicable)
- Client fees
This information is provided in a Credit Proposal Disclosure Document, which clearly outlines how the broker is being compensated for arranging your loan.
We refer to the Credit Proposal Disclosure Document as Statement of Credit Assistance.
The MFAA are the peak association for the mortgage and finance broking industry which we are a member of, for more information on how mortgage brokers are paid and why to use a mortgage broker click here.
