Many home buyers are surprised to learn that most mortgage brokers don't charge them a fee for their service. So how exactly do mortgage brokers make money if they're not charging you directly? Here's how broker payments work.
Commission and trail payments
Most mortgage brokers are paid by the lender, not the borrower. When your loan settles, the lender you choose pays your broker commission, which comes in two parts:
- Upfront commission: A one-off payment from the lender when your loan settles
- Trail commission: Ongoing payments from the lender while your loan remains with them
Upfront Commission
When your loan settles, the lender pays your broker an upfront commission, calculated as a percentage of the loan amount. The rate varies between lenders, and how commission is calculated is disclosed in our Credit Guide.
Lenders may claw back some or all of the upfront commission from the broker if the loan is refinanced or repaid within a set period after settlement.
Trail Commission
Your broker may also receive an ongoing trail commission from the lender, calculated as a percentage of your remaining loan balance and usually paid monthly. This is also disclosed in our Credit Guide.
Some lenders structure their trail commission on a sliding scale, increasing the percentage the longer you hold the loan (assuming you continue making repayments).
How is this good for borrowers?
Here's how this structure works for each party:
- For borrowers: No fee to you for our service; we are paid by the lender. You also get access to a range of loan options
- For brokers: Fair compensation for their market knowledge and service
- For lenders: Efficient customer acquisition without maintaining extensive branch networks
Because trail commission is only paid while your loan stays with the lender, it gives brokers a reason to recommend loans that suit you over the long term. Brokers must also meet the Best Interests Duty, covered below.
The Best Interests Duty
Since January 2021, mortgage brokers are legally required to act in your best interests under the "Best Interests Duty" regulations. This means they must prioritise your interests when providing credit assistance, regardless of which lender might pay them more.
This means that while brokers are paid by lenders, they must recommend a loan that suits your circumstances and put your interests first.
The Bottom Line
Understanding how mortgage brokers get paid helps you understand the advice you receive.
Brokers are paid upfront and trail commission by the lender when your loan settles. This is disclosed in the Credit Guide, and brokers are legally required to act in your best interests.
A broker can compare loans from multiple lenders, negotiate on your behalf and guide you through the application process. At Felix Finance, we compare loans from more than 40 lenders. There is no fee to you for our service; we are paid by the lender.
Last reviewed: September 2026.
