What Does a Mortgage Broker Do (and How Do They Get Paid)?

A mortgage broker is a licensed professional who acts as the go-between for you and the lending market. Instead of applying to one bank directly, you work with a broker who researches, compares, and lodges your application across multiple lenders on your behalf at no direct cost to you. Brokers are paid a commission by the lender, not by you, after your loan settles.

A mortgage broker is a credit intermediary who sources and arranges home loans on a borrower's behalf, drawing on a panel of lenders rather than a single institution.

Key Takeaways

• Mortgage brokers compare multiple lenders simultaneously, saving you time and research effort.
• Brokers are paid by lenders via upfront and trail commissions. You pay nothing directly.
• Australian brokers are legally required to act in your best interests under the Best Interests Duty.
• Using a broker does not cost you more. Lender pricing is the same whether you go direct or via a broker.
• Gateway Finance has access to 28+ lenders, giving you far more choice than any single bank can offer.

What Does a Mortgage Broker Actually Do?

A broker's job goes well beyond finding you a low rate. Here is the full scope of what a good broker does for you, in order:

1. Discovery call: Understand your financial position, goals, deposit size, income type, and timeline.
2. Borrowing power assessment: Calculate how much you can realistically borrow across different lenders.
3. Lender research and comparison: Search the full panel to find lenders whose policies and products suit your situation.
4. Strategy recommendation: Recommend the right loan structure (fixed, variable, split, P&I, interest only) for your goals.
5. Pre-approval application: Prepare and lodge your pre-approval with the most suitable lender.
6. Document preparation: Collect and organise your supporting documents to reduce delays and errors.
7. Application lodgement: Submit your formal application and manage communication with the lender's credit team.
8. Approval management: Respond to lender queries, order valuations, and track your application through to unconditional approval.
9. Loan document coordination: Liaise with your conveyancer or solicitor to ensure loan documents are signed correctly and on time.
10. Settlement support: Confirm settlement is on track and troubleshoot any last-minute issues.
11. Post-settlement review: Check in annually to ensure your loan remains competitive as rates and your circumstances change.

This is the full-service model that Gateway Finance operates on. You are not just getting a loan, you are getting an experienced navigator for the entire process.

How Do Mortgage Brokers Get Paid?

This is the most common question borrowers ask, and it deserves a straight answer.

Mortgage brokers in Australia are paid by lenders, not by borrowers. There are two components to broker remuneration:

Upfront Commission

Paid by the lender when your loan settles. It is calculated as a percentage of the loan amount, typically in the range of 0.55% to 0.70% of the loan value (excluding offset balances). On a $600,000 loan, this is roughly $3,300 to $4,200.

Trail Commission

An ongoing amount paid by the lender monthly for as long as your loan remains active with that lender. Trail commissions are typically around 0.15% to 0.25% per annum of the outstanding loan balance. This incentivises brokers to keep reviewing your loan and ensuring it stays suitable for you over time.

These rates are indicative industry ranges. Individual broker agreements with lenders may vary.

Does Using a Broker Cost You More?

No. Lenders do not charge you a higher rate because you came via a broker. The rate a lender offers is the same whether you walk into a branch or apply through a broker.

In many cases, brokers negotiate rates and fee waivers that are not available to retail customers. Because brokers introduce significant loan volumes to lenders, they often have access to preferential pricing that you simply cannot access going direct.

The commission a lender pays your broker comes out of the lender's margin, not your pocket.

Are Mortgage Brokers Required to Act in Your Best Interests?

Yes, and this is backed by law. Since 2021, all mortgage brokers in Australia have been subject to the Best Interests Duty under the National Consumer Credit Protection Act. This legally requires brokers to:

• Act in the best interests of the borrower, not the lender.
• Prioritise the borrower's interests when there is a conflict with the broker's own interests.
• Recommend a loan that is not unsuitable for the borrower's circumstances.

This obligation is regulated by ASIC (Australian Securities and Investments Commission) and enforced through the licensing framework. All brokers must hold or operate under an Australian Credit Licence.

Gateway Finance holds Australian Credit Licence 518395 and is a member of the FBAA (Finance Brokers Association of Australia) and AFCA (Australian Financial Complaints Authority), providing an additional layer of consumer protection.

Broker vs Bank: A Side-by-Side Comparison

When Does It Make Sense to Use a Mortgage Broker?

A broker adds the most value in these situations:

• You are time-poor and do not want to research dozens of lenders yourself.
• Your situation is complex: self-employed, trust structure, SMSF, construction loan, or multiple income streams.
• You have a small deposit and need a broker who knows which lenders are most flexible on LVR.
• You have had a credit issue and need a broker who knows specialist lender policies.
• You are refinancing and want to know whether your current rate is still competitive without doing all the legwork yourself.
• You are a first home buyer who is unfamiliar with the process and wants a guide from start to settlement.

Going direct to your bank makes sense primarily when you have a straightforward application, an existing relationship that offers genuine loyalty pricing, and time to manage the process yourself.

What Qualifications Should a Mortgage Broker Have?

In Australia, a legitimate mortgage broker must hold:

• A Certificate IV in Finance and Mortgage Broking (minimum), or a Diploma of Finance and Mortgage Broking Management.
• Membership of an industry association such as the FBAA or MFAA (Mortgage and Finance Association of Australia).
• Authorisation under an Australian Credit Licence (ACL) held by themselves or their aggregator.

You can verify any broker's licence on the ASIC Connect Professional Registers at asic.gov.au.

Frequently Asked Questions

General information only. This article does not constitute financial advice. Commission rates cited are indicative industry ranges only and may vary. Australian Credit Licence 518395.