Most Australians who use a mortgage broker never hand over a cent for the service — and yet the broker still gets paid. That surprises people, and it raises a fair question: if the lender is paying, whose side is the broker really on? Here is exactly how broker commission works in 2026, and how to make sure the advice you get is genuinely in your interest.
Do you pay a mortgage broker?
Almost always, no. Brokers arrange roughly eight in ten new home loans in Australia, and for a standard residential loan the borrower pays nothing. The lender pays the broker a commission when your loan settles. It is not added to your loan amount and it does not push up your interest rate — lenders offer the same advertised rates whether you go direct or through a broker. There are exceptions, covered below, but for most home buyers the broker's service is free to them.Upfront commission
When your loan settles, the lender pays the broker a one-off upfront commission, calculated as a percentage of the loan amount. In 2026 this typically runs 0.55%–0.65% of the loan. On a $500,000 loan that is roughly $2,750–$3,250 — paid by the lender, not you.Trail commission
On top of that, the lender pays an ongoing trail commission each year you keep the loan — usually 0.10%–0.20% per year of the outstanding balance. As you pay the loan down, the trail shrinks. Trail exists partly to reward the broker for putting you in a loan you actually stay with, rather than one you refinance out of in a year. In other words, it mildly aligns the broker with keeping you happy over time.Clawback — the one that can reach your pocket
Here is the part worth reading closely. If you repay or refinance your loan within the first year or two, the lender "claws back" some or all of the upfront commission from the broker. Most brokers simply wear that cost. But some reserve the right to pass a clawback on to you — and it will be written into the credit guide or your agreement. Before you sign, ask directly: "If I refinance or sell within two years, will you charge me a clawback fee?" Get the answer in writing.Does commission bias the advice?
It is a reasonable worry: if Lender A pays more than Lender B, won't the broker steer you to A? Two things push against that. First, since January 2021 brokers have operated under a legal Best Interests Duty. They must put your interests ahead of their own and cannot recommend a loan simply because it pays a better commission. ASIC actively reviews broker compliance with this duty. Second, commission rates are fairly standardised across the major lenders, so the incentive to steer is smaller than people assume. That said, "small" is not "zero." The protection is the duty plus your own questions — not blind trust.When a broker does charge a fee
Some brokers charge the borrower a fee for cases where lender commission is low or non-existent: complex self-employed applications, commercial or low-doc loans, or specialist lending. This is legitimate — but it must be disclosed up front in the broker's credit guide, before you engage them. A broker who springs a fee on you late is a red flag.How to make sure the advice is unbiased
- Ask for the credit guide. It lists the lenders on their panel and how they are paid.
- Ask "why this loan for me?" — the answer should be about features that fit your situation (offset, redraw, fixed portion, LMI position), not just the headline rate.
- Verify the licence. A broker must hold, or operate under, an Australian Credit Licence. Check the ACL or credit representative number on ASIC's registers.
- Check the clawback clause and whether any fee applies to you.
- A narrow panel is a warning. A broker with only two or three lenders can only ever recommend from those two or three.