Here are the main ways that mortgage brokers in Melbourne can get paid:
- When a mortgage broker settles a home loan, they receive an upfront commission from the lender. This commission is usually a percentage of the total loan amount and can range from 0.5% to 1.5%. The commission amount is typically higher for larger loans.
- In addition to the upfront commission, mortgage brokers may also receive a trail commission from the lender. This is an ongoing commission paid to the broker each year for the life of the loan. The trail commission is usually a percentage of the outstanding loan balance and can range from 0.15% to 0.35%.
- Some mortgage brokers in Melbourne may charge an upfront fee to cover the costs of their services. This fee is usually a flat rate and can range from a few hundred to a few thousand dollars. However, many brokers don’t charge an upfront fee and rely solely on commissions from the lender.
It’s important to note that mortgage brokers are required by law to disclose their commission and fee structure to their clients. This means that you should have a clear understanding of how your mortgage broker is being compensated before you agree to work with them.
While it may seem like the commission structure incentivizes mortgage brokers to recommend higher-priced loans, it’s important to remember that brokers have a legal obligation to act in their clients’ best interests. This means that they are required to recommend loans that are suitable for your financial situation and goals, even if they don’t offer the highest commission.