Mortgage Broker Trail Commission
Understanding mortgage broker trail commission helps you know how your broker is compensated. Here's a transparent look at how mortgage broker commissions work in Australia.
How Mortgage Broker Commissions Work
Mortgage brokers in Australia are primarily paid through commissions from lenders. This structure means borrowers typically don't pay direct fees.
Types of Commission
Upfront Commission
- Paid when your loan settles
- Typically 0.5% - 0.7% of the loan amount (excluding offset)
- Example: $3,500 - $4,900 on a $700,000 loan
Trail Commission
- Ongoing payment for the life of the loan
- Typically 0.15% - 0.25% annually
- Incentivises brokers to provide ongoing service
- Example: $1,050 - $1,750 annually on a $700,000 loan
Commission Disclosure
Brokers are legally required to disclose all commissions they receive. This information should be provided in your Credit Proposal Disclosure document.
Best Interest Duty
Despite being paid by lenders, brokers must act in your best interests under the Best Interest Duty legislation introduced in 2021.
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