Construction loan commission is paid by the lender through your aggregator, with upfront timing governed by the lender’s construction commission terms. The calculation can follow eligible drawdowns or a facility-based arrangement. Trail follows the drawn balance outstanding, subject to the lender’s deductions and eligibility rules.
A construction approval therefore needs a payment forecast separate from an ordinary settlement. A builder’s invoice, a lender’s release of funds and your commission receipt are different events.
How Construction Loan Commission is Paid
The lender pays upfront for originating the loan and ongoing trail under its commission agreement. Your aggregator receives the payment and passes on your share. Construction payments can extend over the build, so a single approval can produce several upfront receipts.
AFG’s submission on broker remuneration describes settlement, first-draw and progressive payment arrangements. It establishes why construction timing needs separate treatment, rather than a single rule for every lender.
Here is a hypothetical draw-by-draw example. Assume a $600,000 facility has a $240,000 land advance and $360,000 available for construction. Assume upfront is 0.60% of each eligible advance, excluding GST and before the aggregator’s share. These are example terms, not a lender quote.
| Event | New funds advanced | Example upfront |
|---|---|---|
| Land settlement | $240,000 | $1,440 |
| First construction draw | $60,000 | $360 |
| Later construction draws combined | $240,000 | $1,440 |
| Final construction draw | $60,000 | $360 |
| Fully drawn total | $600,000 | $3,600 |
The broker receives $1,440 against the land advance under these assumptions. The remaining $2,160 follows the construction advances. Approval of the full $600,000 does not make all $3,600 payable at land settlement in this example.
Upfront on the Drawn Amount or the Facility Limit
The commission base determines how much upfront you expect, while the payment trigger determines when you expect it. Read both provisions together. An approved limit alone does not establish a commission entitlement.
Under a draw-based calculation, multiply the eligible new advance by the applicable upfront rate. Under a facility-limit calculation, establish the amount the agreement treats as commissionable and its later adjustment rules. Do not count the same advance again when a later statement shows a cumulative balance.
In the hypothetical facility, suppose the client completes the project using only $540,000. Draw-based upfront at 0.60% totals $3,240, which is $360 below the fully drawn forecast. If an agreement instead initially pays on $600,000, the terms determine whether the unused $60,000 requires an adjustment. Those two arrangements produce different cash flow even when the quoted rate is identical.
Land and construction can also be separate loans. ANZ’s construction loan information describes keeping an existing land loan separate or combining it with construction funding. Separate advances can create separate commission events, subject to the commission terms for each account. Record both loan references and avoid forecasting the land amount again within the build.
For the calculation outside progressive construction lending, see how mortgage broker upfront commissions work.
Commission Across Construction Loan Progress Payments
Each eligible construction advance can trigger upfront under a draw-by-draw agreement. The builder’s stage name does not itself create a commission payment.
ANZ’s construction loan guide uses deposit, base, frame, lock-up, fixing and final stages. The final stage is commonly described as practical completion. Stage names and payment allocations depend on the building contract and lender.
| Build event | What to track for commission |
|---|---|
| Deposit | Whether the client pays it from their own funds or the lender advances money |
| Base or slab | The actual advance after the lender accepts the payment request |
| Frame | The released amount and the account receiving the advance |
| Lock-up | Any inspection requirement and the confirmed release |
| Fixing | Further eligible funds drawn, including any approved variations |
| Practical completion | The final advance and any unused facility balance |
A deposit funded entirely by the client’s savings creates no lender draw to commission under the example’s draw-based method. ANZ requires the client’s own contribution to be used before its initial drawdown.
The usual sequence starts with the builder’s progress claim. The client authorises the payment, and the lender checks the documents and arranges any required inspection. Once the lender releases funds, its commission processing and the aggregator’s payment cycle follow. A claim submitted near a statement cut-off can therefore appear in a later commission period.
Forecast receipts from expected fund releases plus the applicable commission lag. Keep an expected month beside each remaining draw and replace it with the actual release when known. If the frame stage slips by two months, move its upfront and dependent later draws forward. Keep received commission separate from expected commission so a late build does not appear to be an unpaid lender obligation prematurely.
The borrower’s construction loan guide explains progressive drawdowns from the client’s side.
Trail During the Build and After Completion
Trail grows as eligible drawn debt increases during construction, assuming the rate and other payment conditions remain unchanged. The undrawn part of the facility does not create an outstanding loan balance.
Interest-only repayments during the build usually leave the principal intact between advances. Extra repayments and offset deductions can still reduce the amount on which trail is paid under the lender’s terms. A larger progress draw can therefore increase trail without producing the amount predicted from the facility limit.
At completion, principal-and-interest repayments start reducing the debt if that is the agreed repayment arrangement. Trail then follows the eligible balance as it changes. Conversion itself does not mean the client has refinanced or that another upfront payment is due.
ANZ describes several completion options, including principal-and-interest repayments, a fixed or variable product switch and a split loan. Match any new account references to the original construction facility. A product switch can change the commission terms, and a new offset can change the commissionable balance where offsets are deducted.
Use the lender’s trail calculation after completion alongside the broader explanation of trail commissions.
Clawback When the Facility is Not Fully Drawn
An unused construction balance affects upfront differently from repayment of money already advanced. Under a draw-based agreement, a cancelled future draw removes expected income that has not yet been earned. It does not automatically reverse commission on earlier eligible advances.
Where upfront has already been paid on an amount later reduced or cancelled, the agreement determines any recalculation or recovery. Separate that adjustment from discharge clawback. A reduced limit, an early repayment and cancellation before any advance are different transactions.
The clawback clock must also come from the lender’s construction terms. Record the specified starting event, whether first drawdown, final drawdown or another contractual event. Do not automatically restart the clock at practical completion or assume every later advance shares the land loan’s start date.
If the build is abandoned, remove future draw income from the forecast and establish what happens to the existing debt. If the client refinances mid-construction, repayment of that debt can trigger clawback under the outgoing lender’s terms. The incoming lender’s commission is a separate entitlement, so budget for any outgoing recovery separately.
Keep the applicable schedule with the loan file. The guide to mortgage broker clawback covers the wider rules and lender differences.
Checking Construction Draws on Your Commission Statement
Reconcile each funded advance against the commission arrangement and the aggregator statement. A staged arrangement can show several upfront lines against one loan across different statements. A separate land account can have its own lines and loan reference.
Use a draw register with the lender reference, stage, amount advanced and release date. Add expected upfront, the expected statement period and the amount received. Compare the total eligible advances with the cumulative upfront received before raising a missing-payment enquiry.
A statement line can combine payments or use a different reference after conversion. Resolve those differences before treating a missing stage label as missing commission. Send the aggregator the draw evidence and the relevant commission clause when the amounts still do not reconcile.
Track My Trail’s Commission Verification matches each upfront payment to the trail that should follow within 2 months. It also shows trail that arrives with no upfront. That mismatch helps you investigate a funded construction loan whose upfront has not appeared, alongside the lender’s draw register.
Clawback Risk lists each loan still inside its clawback period with its days remaining and the upfront exposure under the applicable rules. You can see exposure while construction continues and distinguish it from unpaid future draws.
Questions to Ask the Lender Before You Lodge
Ask the lender’s business development manager or broker help desk to confirm the construction commission arrangement in writing. Obtain answers for the proposed product and account structure.
- Is upfront based on eligible amounts drawn or an approved facility amount, and which deductions apply?
- Does payment follow each advance, the first draw or another event, and which commission cycle captures it?
- How are land and construction splits treated, including any later account conversion?
- What happens to paid upfront if the limit is reduced or part of the facility remains undrawn?
- Which event starts clawback, and how are later advances treated?
- What happens if construction stops, the client changes builder or the loan is refinanced before completion?
- Do trail eligibility or deductions change when the loan converts, switches product or gains an offset account?
Keep the written answers with the file and build your expected payments from those terms. When a statement arrives, reconcile actual advances and receipts against that record.
