Are Mortgage Brokers Free for First-Home Buyers in Victoria?

By Lowest Interest Rates Australia

Introduction

I’ll be honest — when I was buying my first home, I thought using a mortgage broker would be expensive. I imagined sitting down with someone in a crisp suit, sipping coffee while they handed me an invoice for “consulting services.” So when I found out most mortgage brokers in Victoria are completely free for first-home buyers, I nearly fell off my chair.

It sounds too good to be true, right? A professional who does all the legwork, compares dozens of lenders, finds you the best deal — and doesn’t charge you a cent? But it’s true. Mortgage brokers are usually paid by the lender, not by you, which makes them one of the most valuable (and affordable) experts you can have on your home-buying team.

In this article, I’ll break down exactly how mortgage brokers get paid, when fees might apply, and why using one can actually save you money, stress, and time — especially if you’re a first-home buyer in Victoria. Let’s demystify the process and make sure you know exactly what you’re signing up for.

Table of Contents

1. How Mortgage Brokers Get Paid
2. When Mortgage Brokers Are Completely Free
3. When a Broker Might Charge You a Fee
4. Transparency: What Brokers Must Disclose
5. Why First-Home Buyers Benefit Most from a Free Broker
6. Example: How a Broker Helps a First-Home Buyer in Victoria
7. Smart Questions to Ask Before Choosing a Broker
8. Comparing Lenders — Why Going Direct Can Cost More
9. Common Myths About Mortgage Brokers
10. Final Thoughts — Get Expert Help from Lowest Interest Rates

How Mortgage Brokers Get Paid

Here’s the inside scoop: mortgage brokers in Australia, including Victoria, are typically paid by the lender when your loan settles. That means you don’t pay them directly. The lender pays them a commission for introducing you as a customer and handling all the paperwork that comes with securing your home loan.

There are two main types of broker commissions:

• Upfront Commission: A one-off payment from the lender when your loan is finalised. It’s usually a small percentage of your loan amount — around 0.60% to 0.70%. For example, if your loan is $500,000, the broker might receive about $3,000 to $3,500 from the bank.
• Trail Commission: An ongoing payment (around 0.15% per year) that continues while your loan is active. It’s designed to reward brokers for maintaining client relationships and ensuring your loan remains in good standing.

This means brokers are motivated to help you not just secure a loan, but stay happy with it. They want you to succeed because your satisfaction keeps their business thriving.

When Mortgage Brokers Are Completely Free

Good news — for most first-home buyers in Victoria, using a mortgage broker is entirely free. The lender pays the broker’s commission, and you don’t see any extra costs added to your loan. The interest rate you’re offered through a broker is usually the same (or sometimes better) than what you’d get by going directly to the bank.

Here’s what a broker typically does for free:

• Assesses your financial situation and borrowing power
• Compares dozens of lenders to find the best rate
• Guides you through government grants and schemes like the First Home Guarantee
• Prepares and submits your home loan application
• Negotiates with lenders on your behalf
• Provides ongoing support and advice after settlement

It’s like having a home loan concierge — only they don’t send you a bill. The lender foots the cost for their services because the broker saved them the expense of finding and processing a customer directly.

When a Broker Might Charge You a Fee

While most mortgage brokers don’t charge fees, there are a few exceptions — and these are usually very specific cases. If a fee applies, it’s always disclosed upfront before you agree to proceed.

Here’s when fees might apply:

• Complex applications: If your situation involves multiple income sources, overseas employment, or irregular earnings (like self-employment), a broker might charge a small service fee due to the extra time required.
• Non-commission lenders: Some niche or specialist lenders don’t pay brokers commissions. If you want to use one of these, the broker might charge a flat fee instead.
• Very small loans: For loans under $150,000, a broker may apply a modest fee since their commission would be minimal.
• Early discharge or clawback fees: If you refinance or close your loan within 12–18 months, the lender may reclaim the broker’s commission. Some brokers pass that cost to you, but many don’t — just ask upfront.

Even when a fee applies, it’s typically small — often a few hundred dollars — and the broker must provide a written explanation in advance.

Transparency: What Brokers Must Disclose

Mortgage brokers in Victoria are tightly regulated by ASIC (Australian Securities and Investments Commission) under the National Consumer Credit Protection Act. That means they must operate with full transparency.

Before you sign anything, your broker will give you a Credit Proposal Disclosure Document that includes:

• How they’re paid (commissions and potential bonuses)
• Which lenders they work with
• Any fees that might apply to your situation
• Any potential conflicts of interest

This document ensures you know exactly who pays your broker, how much they earn, and that their recommendations are in your best interest — not the bank’s.

Why First-Home Buyers Benefit Most from a Free Broker

First-home buyers have a lot on their plate: deposits, grants, inspections, stamp duty, and confusing acronyms like LMI and FHOG. Having a mortgage broker by your side is like having a financial translator who speaks fluent “bank.”

Here’s why brokers are especially helpful for first-home buyers:

• Access to first-home schemes: Brokers help you apply for programs like the First Home Guarantee or Victorian Stamp Duty Concession.
• Better deals, faster: Brokers compare dozens of lenders — something you’d spend days or weeks doing yourself.
• They do the paperwork: From pre-approval to settlement, brokers handle the paperwork and lender communication.
• They prevent costly mistakes: Brokers can identify red flags or fine print that could trip you up down the line.

And the best part? All of that support usually costs you nothing. The broker’s commission is already built into the lender’s marketing budget — not tacked onto your loan.

Example: How a Broker Helps a First-Home Buyer in Victoria

Let’s meet Jack and Mia, a young couple from Melbourne saving for their first home. They have $60,000 saved and want to buy a townhouse priced at $700,000. They’re not sure where to start — so they contact a mortgage broker at Lowest Interest Rates.

The broker reviews their finances and calculates their borrowing power. Because their deposit is under 20%, they’d normally need to pay Lenders Mortgage Insurance (LMI). But their broker helps them apply for the First Home Guarantee, allowing them to buy with a 5% deposit — and no LMI cost.

After comparing dozens of loans, the broker secures them a lower rate than their bank had offered and manages the entire application process. Jack and Mia don’t pay a cent to the broker — the lender covers the commission after settlement.

By the end of the process, the couple has saved more than $15,000 between waived LMI, reduced interest, and zero broker fees. Not a bad deal, right?

Smart Questions to Ask Before Choosing a Broker

Even though most brokers are free, it’s always good to ask a few key questions upfront to make sure you’re getting the best service:

• Do you charge any upfront or service fees?
• How many lenders are on your panel?
• Do you receive higher commissions from certain lenders?
• Will you provide a written credit proposal disclosure?
• What support do you offer after settlement?

A trustworthy broker will answer every question clearly and transparently. If they seem evasive or vague about fees, that’s a red flag — find another one.

Comparing Lenders — Why Going Direct Can Cost More

Many first-home buyers assume going directly to a bank saves money, but that’s rarely true. Banks only offer their own products, while brokers have access to dozens of lenders — including smaller credit unions and non-bank lenders with competitive rates.

In other words, a broker can find you deals the big banks won’t tell you about. Plus, they can often negotiate lower interest rates or cashback incentives on your behalf.

And since the broker’s commission is already factored into the bank’s costs, you don’t pay more by going through them — you just get better options and professional guidance.

Common Myths About Mortgage Brokers

There are a few myths floating around about mortgage brokers that are worth clearing up:

• “Brokers are biased toward certain lenders.”
  Not true. Brokers are required by law to act in your best interest, and most work with a broad panel of lenders to ensure genuine choice.
• “You’ll get higher interest rates through a broker.”
  Also false. In fact, brokers often secure lower rates because they have access to special offers and direct negotiation channels.
• “Brokers charge hidden fees.”
  Legally, brokers must disclose all fees in writing before you proceed. No surprises, no fine print.
• “Banks don’t like brokers.”
  The truth? Banks love them — brokers bring in qualified customers ready to borrow, saving the bank marketing and processing costs.

Final Thoughts — Get Expert Help from Lowest Interest Rates

So, are mortgage brokers free for first-home buyers in Victoria? In almost every case — yes, absolutely. You get professional guidance, access to exclusive loan products, and a stress-free path to home ownership, all at no cost to you. When fees do apply, your broker must tell you upfront, so you’ll never get an unpleasant surprise.

As a first-home buyer, having a broker in your corner isn’t just convenient — it’s smart. They know the Victorian property market, the latest first-home grants, and the lenders who’ll give you the best deal based on your situation.

That’s exactly what the team at Lowest Interest Rates does every day. They’re passionate about helping first-home buyers across Victoria compare loans, save on interest, and unlock home ownership sooner — all without charging a single dollar for their service.

Visit LowestInterestRates.com.au today to connect with a local mortgage expert who’ll help you find your first home loan with confidence — and zero broker fees.