What Fees Should First-Home Buyers Expect When Using a Mortgage Broker in Melbourne?

By Lowest Interest Rates Australia

Introduction

I still remember the day I sat down with my very first mortgage broker — coffee in hand, dreams of a Melbourne townhouse buzzing in my head, and one burning question ready to blurt out before we’d even said hello: “So… how much is this going to cost me?”

It’s one of the first (and most important) questions every first-home buyer asks when working with a mortgage broker. Between saving for a deposit, budgeting for stamp duty, and calculating moving costs, the last thing anyone wants is a surprise bill. The truth is, many people don’t actually realise that in most cases, a broker’s help comes at little or no cost to you — and when there are fees, they’re usually small, transparent, and well worth it.

In this guide, we’ll unpack everything you need to know about mortgage broker fees for first-home buyers in Melbourne: what’s free, what might cost you, and how brokers actually get paid. Plus, I’ll share some insider tips to help you avoid unnecessary charges and make sure you get the best deal possible on your home loan journey.

Table of Contents

1. How Mortgage Brokers Are Paid
2. When Mortgage Brokers Don’t Charge a Fee
3. When Brokers Might Charge an Upfront Fee
4. Types of Broker-Related Fees You Might Encounter
5. Other Home Loan Costs First-Home Buyers Should Expect
6. Why Brokers Are Worth It — Even If Fees Apply
7. What to Expect from Brokers in Melbourne
8. Questions to Ask Your Mortgage Broker About Fees
9. Real-Life Example: How Fees Work in Practice
10. Final Thoughts — Find the Right Broker with Lowest Interest Rates

How Mortgage Brokers Are Paid

Let’s start with the big question — who pays the mortgage broker?

In Australia, including here in Melbourne, the vast majority of mortgage brokers are paid a commission by the lender (the bank or financial institution) once your home loan is settled. This means that for most first-home buyers, using a broker is completely free.

There are two main types of commissions brokers may receive:

• Upfront Commission: A one-off payment (usually around 0.60%–0.70% of the loan amount) paid when your loan is finalised. For example, on a $500,000 loan, the lender might pay the broker about $3,000–$3,500.
• Trail Commission: A smaller, ongoing payment (around 0.15% per year) as long as your loan remains active. This rewards the broker for maintaining client relationships and ensuring the loan performs well.

Importantly, this commission doesn’t come out of your pocket — it’s part of the lender’s marketing and acquisition costs. So in most cases, you can enjoy expert advice, personalised loan comparisons, and professional support without paying a cent.

When Mortgage Brokers Don’t Charge a Fee

Many first-home buyers are pleasantly surprised to discover that most mortgage brokers in Melbourne offer their services at no direct cost to the client. This is because the broker’s income comes from the lender that approves your loan.

So, if you take out a loan through a broker, the bank pays them for bringing you on as a customer. Think of it as the bank rewarding the broker for doing the legwork — comparing loans, helping with paperwork, and finding suitable products.

Here’s what’s typically free when working with a broker:

• Initial consultation and loan eligibility assessment
• Home loan comparisons and product recommendations
• Loan application preparation and submission
• Negotiation with lenders on your behalf
• Follow-up support until (and after) settlement

In short: for most Melbourne first-home buyers, a broker is like having a personal finance expert in your corner — without the hourly fees you might expect from other professionals.

When Brokers Might Charge an Upfront Fee

While it’s rare, there are certain circumstances where a broker may charge an upfront or “service” fee. These situations are typically the exception, not the rule.

Common examples include:

• Complex loan scenarios: For example, if you’re self-employed, have multiple income sources, or poor credit history, your application may require additional time and research.
• Non-standard loans: Some niche or specialist lenders don’t pay broker commissions, so the broker may charge you directly for their time.
• Low-loan amounts: For very small loans (e.g., under $150,000), a broker might charge a modest fee since commissions would be minimal.

Even then, professional brokers are transparent about any costs from the start. They’ll provide a Credit Proposal Disclosure Document outlining any potential fees, so you know exactly what to expect before committing.

Types of Broker-Related Fees You Might Encounter

Let’s break down the possible fees that could appear when using a broker, although again, most first-home buyers in Melbourne won’t see these at all.

1. Broker Service Fee

A small one-off fee (typically $300–$600) for arranging your loan, usually applied only in special cases. Many brokers waive it for eligible first-home buyers.

2. Loan Packaging or Processing Fee

Some brokers charge an administrative fee for preparing complex applications. Expect around $200–$400 if applicable — though most reputable brokers absorb this cost.

3. Early Discharge or Clawback Fee

If you refinance or close your loan within 12–18 months, your lender may “claw back” the commission paid to the broker. Some brokers pass this fee to clients, so check the fine print if you plan to refinance early.

4. Consultation or Research Fee

Occasionally charged if you seek advice but don’t proceed with a loan. Most brokers offer free consultations, but it’s always good to confirm in advance.

Other Home Loan Costs First-Home Buyers Should Expect

Even though mortgage broker services are often free, buying your first home comes with other unavoidable costs. Here’s a quick overview so you can budget confidently:

• Stamp Duty: In Victoria, first-home buyers may be exempt for homes under $600,000 or receive concessions up to $750,000.
• Conveyancing Fees: Usually $1,000–$2,000 for legal services to transfer the property title.
• Building and Pest Inspection: Typically $300–$600, essential before purchasing.
• Loan Application or Valuation Fees: Some lenders charge setup or valuation fees ranging from $200–$700.
• Lender’s Mortgage Insurance (LMI): Applies if your deposit is less than 20%; can add thousands to your loan, though schemes like the First Home Guarantee can help you avoid it.
• Moving Costs: Removalists, cleaning, utilities — easily $1,000–$3,000.

Knowing these costs upfront helps you avoid “budget shock” and plan for your first home with realistic expectations.

Why Brokers Are Worth It — Even If Fees Apply

Let’s be honest — buying your first home in Melbourne can feel like navigating a maze blindfolded. There’s loan jargon, mountains of paperwork, and about a hundred lenders offering “the best deal.” A good mortgage broker simplifies all that.

Even if a small broker fee applies, the value they bring usually outweighs the cost tenfold. Here’s why:

• They save you money: Brokers compare dozens of lenders to find lower interest rates and fees — often saving thousands over the life of your loan.
• They save you time: Instead of you shopping around and applying to multiple banks, the broker handles it all.
• They improve approval chances: Brokers know exactly what lenders look for and can present your financials in the best possible light.
• They guide you through grants: Brokers help you apply for the First Home Owner Grant and First Home Guarantee to reduce your costs further.

So even if there’s a small upfront cost, the savings in interest, fees, and stress make it more than worth it.

What to Expect from Brokers in Melbourne

Melbourne’s property market is competitive and diverse, so working with a local broker who understands Victorian lending policies and first-home incentives is invaluable. Here’s what to expect when you engage a Melbourne-based broker:

• Personalised support: You’ll get tailored advice based on your deposit size, income, and property goals.
• Local market insights: Brokers know which lenders are friendlier to first-home buyers and which suburbs have more affordable entry-level properties.
• Access to special offers: Many Melbourne brokers have access to exclusive rates or cashback deals not available directly to consumers.
• In-person or online flexibility: Whether you prefer a coffee-shop meeting or Zoom chat, brokers adapt to your lifestyle.

Questions to Ask Your Mortgage Broker About Fees

Transparency is key. Here are some smart questions to ask before working with any mortgage broker:

• Do you charge any upfront or service fees?
• How are you paid by lenders, and does that affect the loans you recommend?
• Do you receive higher commissions from specific lenders?
• Are there any potential clawback fees I should know about?
• Can you show me a detailed breakdown of my total loan costs?

A reputable broker will answer these questions clearly and provide all details in writing before proceeding. If they dodge or rush these discussions, that’s a red flag.

Real-Life Example: How Fees Work in Practice

Let’s imagine Chloe, a 29-year-old teacher from Melbourne, decides it’s time to buy her first apartment in Brunswick. She’s saved a 10% deposit and wants expert help navigating her options.

She contacts a mortgage broker who offers a free consultation. After assessing her situation, the broker finds three competitive loans from major banks — one offering a cashback incentive and another with a lower ongoing rate.

Chloe chooses the lower-rate option. The broker handles the application, gets approval, and helps her apply for the First Home Guarantee to avoid LMI. The lender pays the broker a commission once the loan settles — and Chloe pays nothing for the broker’s service.

Had Chloe gone directly to a bank, she may never have known about the government guarantee or compared enough lenders to save over $10,000 in upfront costs. That’s the power of a good broker — and it didn’t cost her a cent.

Final Thoughts — Find the Right Broker with Lowest Interest Rates

So, what fees should first-home buyers expect when using a mortgage broker in Melbourne? In most cases — none! Mortgage brokers are paid by lenders, not by you, and their job is to make your path to home ownership smoother, smarter, and more affordable. And when there are fees, they’re always disclosed upfront so there are no surprises.

If you’re ready to buy your first home in Melbourne and want expert help without hidden costs, reach out to the friendly team at Lowest Interest Rates. They specialise in helping first-home buyers navigate grants, schemes, and lender options to find the best mortgage for your goals.

Visit LowestInterestRates.com.au today to start your journey with confidence — and discover just how easy (and affordable) buying your first home can be when the right experts are on your side.