A fast-moving brokerage usually reaches for a sliding scale, while a stable team can run on fixed commissions without losing performance. A fixed commission pays the same rate on every settlement or every hour worked. A sliding scale moves the rate up or down as volume, loan size or another measure crosses set thresholds.
For an Australian mortgage brokerage the practical question is narrower than the general debate: which structure fits your lending mix, your team’s experience and the way you pay yourself and any BDMs or processors. Fixed suits predictable files and easy administration. Sliding scales reward growth but need accurate tracking and clear rules.
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Exploring Commission Types
Fixed Commission
A fixed commission pays one agreed rate no matter how much business settles in the period. In a brokerage this often means a set percentage of the upfront and trail the lender pays, split the same way on every file. The predictability makes payroll simple and helps brokers plan their income, which is why many young aggregators and new teams start here.
Sliding Scale Commission
A sliding scale links the rate to thresholds. Settle more loans in a quarter and the percentage rises; fall short and it drops back. Aggregator commercial agreements use this shape for volume-based commission tiers, and some brokerages copy it internally to reward senior brokers who write larger books. There is no regulator-set scale: the bands live entirely inside the written agreement, so read the contract rather than assuming an industry standard.
Evaluating the Pros and Cons
Benefits of Fixed Commission
- Predictable income: Brokers and staff know what each settlement pays, which makes budgeting and serviceability conversations straightforward.
- Simple administration: One calculation per file reduces reconciliation work and disputes over tier levels.
- Steadier client advice: Because the payout does not jump at a threshold, nobody has a reason to push a refinance across a quarter line.
Downsides of Fixed Commission
- Flat incentives: A broker who doubles their settlements earns proportionally no more per file, so strong performers may drift to a competitor with tiers.
- No seasonal reward: Busy periods pay the same rate as quiet ones.
- Retention risk: In markets where rivals offer escalating splits, a purely fixed model can make offers hard to counter.
Benefits of Sliding Scale Commission
- Growth alignment: Higher volumes lift the rate, so the broker and the business chase the same target.
- Talent attraction: Ambitious brokers can see a path to better margins without renegotiating every year.
- Cost control: In quieter periods the lower band protects the business’s margin on each file.
Downsides of Sliding Scale Commission
- Tracking load: Someone has to measure settlements against thresholds accurately, ideally straight out of the CRM rather than a spreadsheet.
- Threshold gaming: Files can be timed or bundled to cross a band, which serves the commission rather than the client.
- Income swings: Brokers near a boundary can watch their rate drop after one slow month, which hurts morale and planning.
Choosing the Structure for Your Brokerage
Match the model to the book. A brokerage settling a similar number of standard residential files each month, perhaps with one processor supporting several brokers, gets little from tiers and gains a lot from simplicity. A growing team chasing aggregator volume bonuses already thinks in quarterly numbers, so passing a version of that ladder down to its brokers keeps everyone measuring the same thing.
The common mistake is copying another firm’s percentages without checking what sits behind them. One brokerage may be paying a share of lender-paid commission under a written agreement with its aggregator; another may be adding a client-paid fee, which carries its own disclosure duties. Before you adopt anyone’s split, confirm what income stream it applies to and what your own agreements allow.
Administration and Transparency
Whichever structure you pick, put the calculation in writing and show the worked numbers with each commission statement. Brokers who can see the settled volume, the applied rate and the resulting payment stop asking and start trusting the system. Review the thresholds annually: a scale built for a $20 million book will distort behaviour once the book doubles, and clawback on unwound loans should reduce measured volume the same way it reduces the commission itself.
If you use customer relationship management software to track settlements, reconcile its numbers against the aggregator statements each period before you apply a tier. Disputes about one file can move a whole team across a threshold, so fix the data before you change the rate.
Next Step
This quarter, model last year’s settlements under both structures using your actual numbers: total the upfront and trail received, apply your current fixed split, then apply a two-tier sliding scale at realistic breakpoints. Compare the results for the business and for your top and median writers. If the difference is small, stay fixed and keep the administration simple; if it is large, draft tier rules that cannot be gamed by timing a settlement across a quarter end.
