Do mortgage brokers charge fees, or are they free?
By Lena Delgado · Updated 2026-07-08
If you have never used one before, the first question most people have about a mortgage broker is the obvious one: what does this actually cost me? The short answer for most home loans is nothing directly. A broker is paid by the lender, not by you, once your loan settles. But “usually free” isn’t the same as “always free”, and it’s worth understanding exactly how the payment works before you sit down with anyone.
How broker commission actually works
When a lender approves and settles a loan a broker has arranged, it pays that broker two things: an upfront commission, calculated as a percentage of the loan amount, and a smaller ongoing trail commission for as long as the loan stays open. This is baked into the lender’s cost of doing business, similar to how a bank branch’s own lending staff are paid a salary regardless of which product they sell you. You don’t see a separate invoice for it, and it doesn’t get added on top of your interest rate.
This is also why the same loan, at the same rate, generally costs you the same whether you go through a broker or apply directly with the bank. The commission comes out of the lender’s margin, not out of your pocket on top of it.
When a fee might land on you
Commission-only pay works well for a standard home loan. It gets less straightforward in a few situations:
- Complex commercial, SMSF or business lending, where the work involved doesn’t map neatly to a single settled residential loan.
- A deal that requires significant extra work, such as a difficult self-employed application, then falls through before settlement.
- Some brokers charging a fixed consultation or advisory fee for extended strategy work, separate from arranging the loan itself.
None of this is hidden by default, but it isn’t always volunteered either. Ask directly, in the first conversation, whether any part of your situation could trigger a fee, and get it in writing if so. If a broker’s answer to how they score against our methodology matters to you, that scoring also weighs transparency around fees and commissions, not just star ratings.
What to ask before you commit
A short list of questions tends to clear up most of the confusion in one conversation:
| Question to ask | Why it matters |
|---|---|
| How are you paid on this loan? | Confirms whether it’s commission-only or includes a fee |
| Would any part of my situation trigger a direct fee? | Surfaces the exceptions before they surprise you |
| How many lenders are you accredited with? | A narrow panel limits how much comparison you’re really getting |
| Does the commission change between lenders on your panel? | Commission rates can vary, which is worth knowing even if it rarely changes the recommendation |
| What happens if I don’t proceed with the loan? | Clarifies whether an aborted application could cost you anything |
Why this rarely changes the outcome, but still matters
Being paid by the lender doesn’t automatically mean a broker is pushing you toward whichever pays them best. Best interests duty legally requires brokers to recommend what actually suits your situation, and the brokers who build a long-term client base tend to do exactly that, since repeat business and referrals matter more than a slightly higher commission on one deal. Still, understanding how the payment works means you can ask sharper questions and read a recommendation with the right context, rather than assuming either “it’s free so it doesn’t matter” or “they’re getting paid so I can’t trust it”.
Once you understand the basic mechanics, the more useful question shifts from “what does this cost me” to “is this broker actually comparing enough lenders to make the commission structure irrelevant”. A broker with a wide, genuinely compared panel gives you far more reassurance than any amount of reading about how commission works in the abstract. If refinancing ends up part of that conversation later, our refinancing savings guide breaks down when switching is actually worth the cost of doing it.
This is general information about how broker remuneration typically works in Australia, not financial advice for your specific situation. Ask any broker you’re considering to set out their fee structure and commission arrangement in writing before you proceed, and start from our home page if you want to compare providers before you pick up the phone.
FAQ
- So mortgage brokers really don't charge anything?
- Most don't charge you directly for a standard home loan. They're paid by the lender through an upfront commission when your loan settles, plus a smaller trail commission for as long as you keep the loan. You still pay for the loan itself through interest and any lender fees, just not for the broker's time.
- When would I actually be charged a broker fee?
- It's more common on complex cases: some self-employed applications, certain commercial or SMSF lending, or situations where a lot of extra work is needed and the loan doesn't end up settling. Ask upfront whether any scenario in your situation would trigger a fee.
- Does commission make a broker recommend the wrong loan?
- It can create a conflict of interest, which is exactly why brokers are legally required to act in your best interests when recommending a home loan. Ask them to explain why a recommended lender suits your situation, not just what it pays them.
- Is a broker cheaper than going to a bank directly?
- Usually there's no cost difference either way, since a bank's own loan officers are salaried rather than commission-based on a single product. The value of a broker is in comparing multiple lenders at once, not in a lower price for the same rate.