What are mortgage broker commissions?
Mortgage broker commissions fall into two groups: a one-off upfront payment and ongoing trail. An upfront commission is paid by the lender once, at loan settlement and for most brokers it remains the largest single payment a deal produces.
Rates vary by lender and product, commonly sitting around 0.65% to 0.7% of the loan amount plus GST. On a $500,000 loan, that is roughly $3,250 to $3,500 before GST. Lenders adjust schedules and run campaign rates, so confirm the current figure for each deal instead of relying on last quarter’s schedule.
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Upfront versus trail at a glance
Upfront pays once and stops there. Trail Commissions keep paying monthly for the life of the loan, which is why many brokers treat upfront as cash flow that funds the business now and trail as the asset that builds over years. A healthy book needs both, and neither replaces the other.
What the payment covers
By settlement, you have run the fact find, compared products across your panel, managed the application process and shepherded everyone through to loan settlement. The lender pays the upfront commission for that work, and it is also the payment most exposed to falling through, because a deal that collapses before settlement pays nothing.
How upfront commission is calculated
The calculation is simple multiplication: loan amount multiplied by the commission rate. A $500,000 loan at 0.65% returns $3,250 before GST; the same loan at 0.7% returns $3,500.
Three things move the final number:
- Loan size: commission scales with the amount borrowed, so a larger loan pays more for similar work.
- Product and LVR: specialised or high-LVR lending can attract different rates, and some lenders exclude certain products from standard schedules.
- Lender policy: base rates differ between lenders, and some tier their rates by volume or run time-limited campaign rates.
Different loan types settle on different timelines too, which affects when the payment actually arrives. To see the whole picture for a deal, pair the upfront estimate with a trail commission calculator so you know what the loan pays beyond settlement.
Disclosure and conflicts of interest
Commission-based pay creates a known conflict: a product that pays you more can look attractive regardless of fit. The safeguards are disclosure and process. Tell clients how you are paid, document why a recommendation suits them, and apply the same comparison steps to every loan. Clear explanations about remuneration also help build trust with clients who have heard the horror stories.
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ASIC regulates how mortgage broker remuneration works in Australia, and your licensee sets the exact disclosure format it expects. The practical checkpoint is your own file: every recommendation should survive the question, would I make this recommendation if every lender paid the same?
Clients see the numbers themselves. The Credit Proposal document given before they accept a loan lists the commissions payable on that recommendation, so treat it as part of the conversation rather than fine print.
Clawback: the condition attached to upfront
Clawback is the lender reclaiming part of your upfront when a loan ends too soon, usually because the borrower refinanced or repaid early. The clawback period commonly runs 12 to 24 months from settlement, but the exact scale and window differ by lender, so check each agreement rather than assuming one rule covers your panel.
Two habits keep clawback from ambushing your cash flow. First, record the clawback expiry date for every settled loan and review any exposure before making large commitments. Second, hold a reserve covering several months of income, because a cluster of early refits can otherwise wipe out a quarter’s earnings.
Tracking helps here as well. Record expected settlement dates and commission payments in your customer relationship management system so an invoice that never arrives gets noticed within weeks, not at tax time.
Where aggregators fit
Aggregators sit between brokers and lenders. They accredit you across a lender panel, provide compliance and support services and negotiate commission arrangements with lenders. In exchange, they take a share of the commission, so the rate on your agreement is not the rate that reaches your account.
When you compare offers or plan your income, model what lands after Aggregator fees are deducted. A headline rate means little until you see the net figure against your own settlement volumes.
What to do next
This week, reconcile your last month of settlements against the commission statements received. Confirm current upfront rates for every lender in your active pipeline, note the clawback exposure on loans settled in the past two years, and calculate the net commission on one recent deal after your aggregator’s share. Those three checks tell you whether the income you think you earn matches the income that arrives.
Upfront commissions fund the business today, but the durable version of that income comes from Client Relationships that return for their next purchase and refer the people around them. Treat every settled loan as the start of that cycle, not the end of it.
