How Transparent Should the Broker Be About Their Commissions in Victoria?

By Lowest Interest Rates Australia

Introduction

When I applied for my first home loan, I remember staring at the mountain of paperwork my broker handed me — and right in the middle of it was a section about “commissions and remuneration.” It made me pause. Wait… my broker gets paid by the bank? How much? And does that mean they’re recommending this loan because it’s good for me or good for them?

If you’ve ever had those same questions, you’re not alone. Commission structures can sound mysterious — and in the past, they often were. But times have changed. Today, Australian mortgage brokers are legally required to be upfront about how they’re paid, thanks to strong regulations designed to protect borrowers.

In this article, we’ll unpack exactly how transparent a broker should be about their commissions in Victoria, what they must disclose, how to read those disclosures, and why working with a broker who’s open and honest about their pay is one of the smartest things you can do as a borrower.

Table of Contents

1. Why Transparency Matters in the Mortgage Industry
2. How Mortgage Brokers Are Paid
3. What the Law Says About Commission Disclosure
4. Where to Find Commission Details in Your Loan Documents
5. What a Transparent Broker Looks Like
6. Warning Signs of Poor Transparency
7. Do Commissions Affect Which Lender a Broker Chooses?
8. Questions to Ask Your Broker About Commissions
9. Why Full Disclosure Builds Better Client Relationships
10. Final Thoughts – Work with Lowest Interest Rates

Why Transparency Matters in the Mortgage Industry

Buying a home is one of the biggest financial decisions you’ll ever make — and your broker plays a crucial role in helping you find the right loan. But because brokers are usually paid by lenders (not you), it’s essential that their recommendations are based on what’s best for your financial situation, not what earns them the biggest commission.

Transparency ensures that relationship stays built on trust. When your broker clearly explains how they’re paid, it helps you understand:

• 💡 Why they’re recommending a specific lender
• 💰 How much they earn from your loan
• 📄 Whether all lenders pay them equally (or not)
• 🔍 Whether there are potential conflicts of interest

In short, full disclosure gives you the confidence that your broker is acting in your best interest — not their wallet’s.

How Mortgage Brokers Are Paid

Most mortgage brokers in Victoria don’t charge you directly for their services. Instead, they receive commissions from the lender when your loan settles. These payments typically come in two forms:

1. Upfront Commission

This is a one-time payment the broker receives from the lender once your loan is settled. It’s usually a percentage of the loan amount — often between 0.50% and 0.70%. For example, on a $500,000 loan, the broker might receive $2,500 to $3,500 upfront.

2. Trail Commission

Trail commissions are smaller ongoing payments (typically 0.10%–0.20% per year) paid by the lender while your loan remains active. They reward brokers for continuing to service and support clients after settlement.

So if your loan balance sits around $450,000 in year two, your broker might receive $450–$900 for ongoing support and administration. Importantly, if you refinance or pay off the loan early, those trail commissions usually stop.

What the Law Says About Commission Disclosure

Australian law is crystal clear on this point: brokers must disclose their commissions to you before you agree to proceed with a loan.

This requirement falls under the National Consumer Credit Protection Act 2009 (NCCP Act) and is enforced by ASIC (the Australian Securities and Investments Commission). In addition, the Best Interests Duty (BID), introduced in 2021, requires brokers to act in the borrower’s best interest at all times — meaning they can’t recommend a loan that benefits them more than you.

Key Legal Obligations:

• 🔹 Brokers must give you a Credit Proposal Disclosure Document (CPD) outlining how they’re paid and any potential conflicts.
• 🔹 They must explain whether different lenders pay different commission rates.
• 🔹 They must disclose any fees you may be charged directly.
• 🔹 They must provide this information before you sign the loan application.

If your broker fails to do this, they’re breaching both the law and their professional ethics — and you should walk away immediately.

Where to Find Commission Details in Your Loan Documents

You don’t need to be a legal expert to find the information — it’s right there in your paperwork. Here’s where to look:

• Credit Guide: This document explains your broker’s role, their licence number, and how they’re compensated.
• Credit Proposal Disclosure: This lists the estimated commissions (both upfront and trail) they’ll receive from your chosen lender.
• Preliminary Assessment: This shows how the broker determined which product was in your best interest — including why one lender was chosen over others.

Ask your broker to walk you through these sections. A good broker won’t rush or skip over them — they’ll happily explain everything in plain English.

What a Transparent Broker Looks Like

Transparency isn’t just about handing you a document; it’s about communication and honesty. Here’s what you can expect from a broker who’s doing things right:

• ✅ They clearly explain how they’re paid — before you ask.
• ✅ They provide written disclosure of all commissions and fees.
• ✅ They clarify whether all lenders on their panel pay the same commission.
• ✅ They focus on what’s best for you, not what earns them the most.
• ✅ They’re upfront about clawbacks (when lenders reclaim commission if a loan ends early).

Transparency builds trust. When a broker is open about their income, you can be sure their advice is based on expertise, not incentives.

Warning Signs of Poor Transparency

Unfortunately, not all brokers operate with the same level of professionalism. Here are some red flags to look out for:

• ❌ They avoid discussing commissions or deflect when asked.
• ❌ They promise “no hidden fees” but can’t produce written proof.
• ❌ They push one lender aggressively without explaining why.
• ❌ They skip over your Credit Proposal or don’t provide one.
• ❌ They pressure you to sign documents quickly.

If any of these happen, it’s worth getting a second opinion from another broker. Ethical professionals will always welcome transparency and competition.

Do Commissions Affect Which Lender a Broker Chooses?

This is one of the most common questions — and the reason transparency matters so much. While most lenders pay similar commissions, there can be small differences. However, under the Best Interests Duty, brokers must prove that their recommendation is based on your circumstances, not the payout amount.

In practice, this means your broker must compare:

• Interest rates and comparison rates
• Fees and loan features
• Your eligibility and borrowing power
• Overall suitability — not just short-term savings

A broker who acts in your best interest will happily show you a side-by-side comparison of different lenders and explain why they’re recommending one over another — regardless of commission.

Questions to Ask Your Broker About Commissions

It’s completely appropriate to ask your broker about how they get paid. Here are a few questions you can use to start the conversation:

• 💬 “Do you receive the same commission from all lenders?”
• 💬 “Can I see the commission structure for this loan?”
• 💬 “Are there any upfront or ongoing fees I’ll pay directly?”
• 💬 “What happens if I refinance or pay off my loan early — does that affect your commission?”
• 💬 “How do you ensure your recommendations are in my best interest?”

Asking these questions doesn’t just protect you — it sets the tone for an open, trustworthy relationship.

Why Full Disclosure Builds Better Client Relationships

When brokers are transparent about commissions, everyone wins. Here’s why:

• 🏦 Trust and loyalty: You know your broker is honest and working for you, not the lender.
• 📊 Clarity: You understand where every dollar goes — no surprises.
• 💬 Open communication: You can discuss refinancing or loan changes confidently in the future.
• ⚖️ Accountability: Transparent brokers operate within strong legal and ethical frameworks.

In fact, many clients who work with transparent brokers end up referring friends and family because they appreciate the honesty and guidance they receive.

Final Thoughts – Work with Lowest Interest Rates

When it comes to finding the right mortgage broker in Victoria, transparency isn’t optional — it’s essential. A broker who clearly explains how they’re paid and why they recommend certain lenders is showing you they respect your trust and your financial wellbeing.

At Lowest Interest Rates, we’re proud to be upfront about every part of the process — including commissions. Our brokers provide full written disclosure before you proceed, and we always act in your best interest under Australian law.

Whether you’re a first-home buyer, investor, or refinancing your current property, we’ll help you compare lenders, understand every fee, and make confident decisions about your home loan.

💬 Ready to work with a broker who values honesty and clarity? Visit LowestInterestRates.com.au today and speak with one of our licensed Melbourne-based mortgage experts.