How Mortgage Broker Commissions Work in Australia: Upfront vs Trail

Australian mortgage brokers are paid by the lender, not the borrower, through two commissions: an upfront commission paid shortly after settlement — commonly around 0.65% of the loan amount plus GST — and an ongoing trail commission paid monthly for the life of the loan, commonly around 0.15% per annum plus GST of the outstanding balance. Both figures vary by lender and are subject to your aggregator’s split, net-of-offset calculations, and clawback if the loan discharges early.

That one-paragraph answer is the shape of it. The detail is where brokers lose money — so the rest of this guide covers how each component is actually calculated, when it’s paid, and what makes it disappear.

Who actually pays a mortgage broker in Australia?

The lender does. Under the standard Australian remuneration model, the borrower pays no fee for a broker’s service in a typical residential transaction; the lender pays the broker for originating and maintaining the loan, out of its own margin.

This model is now the mechanism behind the overwhelming majority of Australian home lending. According to the MFAA’s Quarterly Market Share Report (data compiled by Cotality), brokers facilitated a record 81% of all new residential home loans in the March 2026 quarter — up from 55.3% in March 2018 — settling $124.88 billion in that quarter alone.

Reporting on those figures, MFAA chief executive Anja Pannek noted that this places Australia among a small group of countries — alongside the United Kingdom and the Netherlands — where brokers facilitate more than 80% of mortgage lending (Broker Daily).

That scale matters for a practical reason: broker remuneration is heavily scrutinised, largely standardised across major lenders, and governed by the Best Interests Duty (BID) — which requires brokers to act in the borrower’s best interests, meaning commission differences between lenders cannot drive a recommendation. Commissions must also be disclosed to the borrower in writing.

What is upfront commission and how is it calculated?

Upfront commission is a one-off payment from the lender to your aggregator (and on to you) triggered by settlement of the loan.

Typical range: industry guidance from the MFAA puts upfront commission generally between 0.65% and 0.70% of the loan amount (Entry Education summary of MFAA guidance). In practice, published ranges across the market run wider — commonly cited as 0.60–0.70% plus GST (Soren Financial) — with some major-bank schedules starting nearer 0.50% + GST and some specialist or non-bank products higher.

Treat every figure in this guide as indicative. Rates differ by lender, product, LVR, channel and settlement date, and they change without much fanfare. The only authoritative number for your loan is the one on your aggregator’s current commission schedule.

Timing: upfront is typically paid after settlement rather than at settlement, commonly within about six to eight weeks depending on the lender’s commission cycle and your aggregator’s payment run.

The worked example

A $700,000 loan at 0.65% upfront:

Then the aggregator split applies — see What does the aggregator take? below. The $4,550 is not what lands in your account.

Check your own schedule. Every lender publishes a commission schedule through your aggregator, and rates change. The numbers above illustrate the mechanics; your actual entitlement is whatever your aggregator’s current schedule says for that lender, that product, and that settlement date.

What is “net of offset” and why does it reduce my commission?

This is the rule that most often produces a commission that looks wrong — and it’s the one worth understanding properly.

Upfront commission is generally calculated on the amount the borrower actually draws down, less any funds sitting in an offset account — not on the approved facility limit.

The rule came out of the Combined Industry Forum (CIF) reform package, developed in response to ASIC’s Report 516 review of mortgage broker remuneration and the Sedgwick retail banking remuneration review. One of the CIF’s six agreed principles was that the standard commission model should avoid incentives for consumers to borrow more than they need — for example, by basing commission on facility drawdown net of offset (Australian Banking Association; CIF submission to Treasury).

NAB was the first major bank to implement it, from November 2018, calculating upfront on the drawn amount net of offset rather than the approved facility. Other lenders followed through 2018–19 — Adelaide Bank, for instance, moved to the drawn amount less offset measured at the end of the settlement month.

Why it costs brokers money

The classic example: a client refinances and has $200,000 parked in an offset account to fund a granny flat or renovation. Construction takes months. If the lender measures the offset balance a few days after settlement, the broker is paid on $200,000 less than the loan they actually arranged — despite having done the work and acted in the client’s best interests.

The measurement window is the critical variable, and it differs by lender. Reported approaches have ranged from a few days after settlement to 14 or 20 days, to month-end. Following industry submissions that a three-month calculation period was too short, the Government extended the relevant cap to a full 365 days — but application still varies between lenders, and some pay a follow-up “utilisation” commission if funds are drawn later, while others don’t.

Practical implication: on any deal with a material offset balance at settlement, your expected commission is not simply loan size × rate. If you’re not modelling the net-of-offset effect, you can’t tell an underpayment from a correct payment.

What is trail commission and how does it work?

Trail commission is an ongoing payment for as long as the loan stays on that lender’s book and is performing. It’s the annuity that makes a mature broking business valuable.

Typical range: commonly around 0.15–0.20% per annum plus GST of the outstanding loan balance (Soren Financial; PropertyChat). Published ranges are wider than that headline suggests: Home Loan Experts reports trail varying from 0% up to around 0.35% + GST, with the higher-trail products typically using a stepped structure. Again — verify against your own schedule rather than any published range.

How it’s paid: usually monthly, calculated on the outstanding balance, which means trail declines as the loan amortises. It also falls away entirely when the borrower refinances, sells, or pays the loan out.

Stepped (tiered) trail

Not all trail is flat. Some lenders use a stepped structure that starts lower — sometimes at zero — and increases over several years the longer the loan is held. This rewards retention, but it also means:

• Two loans of identical size with different lenders can pay materially different trail.
• Your trail entitlement on a given loan changes on an anniversary date, which is precisely the kind of scheduled change that goes unverified.

The worked example

A $700,000 loan at 0.15% p.a. trail, paid monthly:

Individually small. Across a book of 500 loans, it’s the difference between a business with an asset and a business without one — and it’s why a variance of a few percent on trail, undetected, compounds into serious money.

Balances above are illustrative (P&I, 30-year term, indicative amortisation) and ignore extra repayments, redraw and offset. Your actual trail is calculated on the real balance each month.

Upfront vs trail: what’s the actual difference?

The strategic point: upfront pays this month’s bills; trail is the asset. A broking business valued for sale is largely valued on the quality and durability of its trail book — which makes unnoticed trail leakage a valuation problem, not just an income problem.

What is clawback and when does it apply?

Clawback is the lender’s right to reclaim some or all of the upfront commission if the loan discharges within a defined window after settlement. The borrower never pays it — it’s strictly a lender-to-broker mechanism.

The legal ceiling is two years. Under reg 28VG of the National Consumer Credit Protection Regulations 2010, a clawback obligation cannot run for more than 2 years, cannot exceed the commission you were paid, and cannot be passed to the consumer.

Within that ceiling, the traditional shorthand was 100% clawback in year one and 50% in year two.

That shorthand is now unreliable, because lenders have moved in different directions within the cap:

• NAB introduced a monthly sliding scale effective 1 September 2024, reducing from around 50% at month 14 down to roughly 6% by month 24 — replacing a flat 50% that previously applied across months 13–24.
• Some lenders cease clawback earlier in the second year rather than running the full 24 months.
• A number of non-bank lenders have shortened clawback windows substantially or removed clawback on some products entirely, using it as a point of competitive difference.

The financial impact is not trivial. A CoreData survey conducted for the FBAA found that around eight in ten brokers had been affected by clawbacks in a single year, with close to half losing more than $10,000.

What this means practically: every loan you settle carries a contingent liability for roughly two years. If you recognise upfront commission as clean profit without provisioning for clawback, you overstate income in every growth year — and a refinancing wave collects the difference in cash, from months that didn’t earn it.

We cover this in depth in the companion guide on mortgage commission clawbacks, and clawback risk monitoring is a core part of what CommissionsIQ does.

What does the aggregator take?

Commission does not flow directly from lender to broker. It flows lender → aggregator → broker, and the aggregator’s arrangement determines what you actually receive.

Models vary widely:

• Percentage split — the aggregator retains a share of upfront and/or trail.
• Flat fee / subscription — you keep effectively all commission and pay a fixed monthly fee for services and CRM.
• Hybrid — a split up to a volume threshold, then improved terms above it.

Brokers operating under a franchise or a sub-aggregation arrangement typically retain a smaller share than those contracting directly with an aggregator on flat-fee terms.

Because the split sits between the lender’s schedule and your bank account, verifying commission requires checking two things, not one: that the lender’s payment was correct, and that the aggregator applied the right split to it.

A note on GST

Commission rates are conventionally quoted plus GST. If you’re registered for GST, the commission is generally paid to you inclusive of a GST component that you then remit — meaning the GST portion is not income. Aggregators typically issue recipient-created tax invoices (RCTIs) on your behalf.

This matters for reconciliation: a statement that looks 10% “over” or “under” against your expected figure is very often a GST-treatment difference rather than an error. Compare like with like — always check whether you’re reading a GST-inclusive or GST-exclusive figure before concluding you’ve been underpaid.

This is general information, not tax advice. Confirm your own GST position with your accountant.

Why do commission underpayments happen so often?

Rates are broadly standardised. Calculation methods are not. That gap is where the money goes missing:

1. Net-of-offset measurement differs by lender — different windows, different treatment of later drawdowns.
2. Stepped trail changes on anniversaries that nobody diarises.
3. Rate changes apply from a settlement date, so loans settled either side of a change have different entitlements.
4. Split loans and package products may attract different rates per portion.
5. Aggregator statements arrive as monthly summaries, not loan-by-loan calculations you can easily verify.
6. Trail simply stops on a loan that discharged — and a stopped payment is far harder to notice than a wrong one.

The uncomfortable arithmetic: a broker with a 500-loan book receives thousands of individual commission line items a year. Checking them by hand is not realistic, so most are never checked at all. A variance of even a few per cent, sustained across a book, is a five-figure annual leak that never appears as a single alarming number — just a slightly smaller deposit each month.

This is exactly the problem CommissionsIQ was built to solve: reconciling what you were paid against what you were owed, loan by loan, and flagging the difference.

Frequently asked questions

The bottom line

Australian broker commission is simple in structure and messy in execution. Upfront and trail are easy to describe; what makes them hard is that every lender calculates them slightly differently, the rules change, and the payments arrive as aggregated statements rather than verifiable calculations.

Three things worth doing regardless of what software you use:

1. Know your expected commission before it arrives — including the net-of-offset effect on deals with offset balances at settlement.
2. Provision for clawback on every settlement for the applicable window, rather than treating upfront as clean profit.
3. Reconcile trail systematically, because a payment that stops is much harder to notice than one that’s wrong.

Sources and further reading

• MFAA — Quarterly Market Share Report (data compiled by Cotality), March 2026 quarter
• MFAA — industry guidance on broker remuneration ranges
• ASIC — Report 516: Review of mortgage broker remuneration
• Combined Industry Forum — response to ASIC Report 516 and reform package (submission to Treasury)
• Sedgwick — Retail Banking Remuneration Review (Australian Banking Association)
• FBAA / CoreData — broker clawback survey
• Lender commission schedules as published via aggregators (NAB, Adelaide Bank and others cited above)

Always verify against your own aggregator’s current commission schedules. Rates, calculation methods and clawback terms change, and vary by lender, product, LVR, channel and settlement date. Every figure quoted here is an indicative published range at the time of writing, not a quote for your loan. This guide explains the mechanics; it is general information, not financial, tax or legal advice.

Review cadence: commission ranges, clawback structures and market-share figures date quickly. Re-verify all cited figures and refresh dateModified at least every 6 months, and immediately after any material lender or regulatory change.

This is general information, not financial, tax or legal advice. Figures are indicative, vary by lender, product and settlement date, and are not a quote for any particular loan. Always verify commission entitlements against your aggregator's current schedules.