Upfront commission: Paid by the lender to the broker at settlement — typically 0.55% to 0.65% of the loan amount. On a $600,000 loan, this is approximately $3,300 to $3,900. This is paid by the lender from their margin, not added to your rate.
Trail commission: An ongoing payment from the lender to the broker — typically around 0.15% per year of the outstanding loan balance. On a $600,000 loan, this is approximately $900 per year. Trail commission is what funds the ongoing service brokers provide — annual rate reviews, refinancing assessments and ongoing advice.
No. The commission paid to a broker comes from the lender's margin and does not affect your interest rate or loan costs. Your rate, fees and repayments are identical whether you apply through a broker or directly to the lender.
Under Best Interest Duty, brokers are legally prohibited from recommending a loan primarily because it pays a higher commission. Commission rates must be disclosed in writing before you proceed.
Most lenders claw back the upfront commission from the broker if the borrower refinances or repays the loan within 12 to 24 months of settlement. This is a cost borne by the broker — not the borrower. It does mean brokers have a financial interest in ensuring your loan remains appropriate for the long term.
Jason and Steve are Adelaide mortgage brokers who give honest, free advice. No obligation.
The information on this page is general in nature and does not constitute financial advice. Given Finance Pty Ltd (t/a Lendology) ACN 624 144 501 is authorised under LMG Broker Services Pty Ltd ACL 517192.