Mortgage Brokers And Fees In Australia: What You Really Pay

Most Australian mortgage brokers are “free” for borrowers in the sense that you usually don’t pay them directly. Instead, the lender pays the broker a commission if your loan settles. But that’s only half the story. You can still face broker fees in some cases, and there are indirect costs if the loan structure isn’t right for you.

In this guide, we’ll unpack exactly who pays a broker, when you might pay a fee, what must be disclosed by law, and how to test whether using a broker is actually good value for you this week.

Quick answers: Are mortgage brokers really free in Australia?

1. Most of the time, yes – you don’t pay the broker directly. For standard home loans, the lender pays the broker a commission if your loan proceeds to settlement.
2. Some brokers also charge you a fee. This is more common for complex, small or non-standard loans. Any fee must be disclosed in writing before you proceed.
3. The bigger issue isn’t the fee – it’s the loan quality. A slightly cheaper-fee broker who puts you in the wrong product could cost you tens of thousands over time.
4. You have protection. Brokers must act in your best interests under Australian law, and must give you written disclosure explaining how they’re paid.

If you want to go deeper on broader myths about brokers, pair this article with the cluster guides on how broker remuneration really works and small vs large brokerages once they’re published.

How mortgage brokers actually get paid in Australia

The basic model: lender pays, not you

For a typical home loan in Australia, the broker’s income comes from the lender if – and only if – your loan settles. There are two main components:

• Upfront commission – a percentage of the loan amount paid once the loan is advanced.
• Ongoing (trail) commission – a smaller amount paid each month or quarter while the loan remains in place.

Every lender has its own commission scales and clawback rules (more on that later). ASIC and the Combined Industry Forum have set clear standards around how these must operate and be disclosed.

Typical commission ranges (illustrative only)

Exact figures vary by lender and product type, but rough home loan ranges are:

• Upfront commission: often around 0.5–0.7% (incl. GST) of the drawn loan amount
• Trail commission: often around 0.10–0.20% p.a. (incl. GST) of the remaining loan balance

These numbers are indicative only, not a quote. Actual arrangements differ between lenders and over time.

Worked example: $800,000 owner‑occupied loan

Let’s say you borrow $800,000 on a principal-and-interest home loan.

• Upfront commission at, say, 0.65% = $5,200 (incl. GST)
• Trail on an average balance of $780,000 in year one at, say, 0.15% p.a. ≈ $1,170 (incl. GST)

The lender pays these amounts to the broker’s business. You do not pay them directly. You still pay your normal interest and fees to the lender, just as you would if you went direct.

This is why many Australians view brokers as “free”. But there are important nuances.

Do mortgage brokers ever charge borrowers directly?

Yes – here’s when you’re more likely to see a broker fee

Many brokers work on a “no direct fee to the borrower” model. Others will charge a separate broker fee in certain situations, such as:

• Very small loans (e.g. $150,000 top‑up or small regional purchase) where lender commission barely covers the work
• Complex self‑employed or multi‑entity structures where analysis and tax strategy take substantial time
• Non-standard or private funding where standard lender commissions don’t apply
• Time‑pressured or rescue scenarios where multiple declined deals need to be unwound and restructured

In these cases, a broker might charge a flat fee (for example, $990–$3,000) or a percentage fee, often rebated if the lender also pays adequate commission.

What the law says about disclosing broker fees

Under the National Consumer Credit Protection Act and ASIC guidance, brokers must:

• Disclose any and all fees you will pay the broker, in writing
• Disclose how they’re paid by lenders (including commission structures)
• Act in your best interests when recommending a credit product (Best Interests Duty)

You should receive a Credit Quote and Credit Guide before you commit. These documents must clearly state any broker fee you might pay, and when it becomes payable.

If you don’t see this in writing, or it’s vague or rushed, that’s a red flag.

Typical broker fee setups (illustrative)

The key is that any borrower‑paid fee must be crystal clear before you proceed.