When you go to get a home loan you might be surprised to find out that most mortgage brokers are free. And once you start to work with one, you might be even more surprised to see just how hard they work. Especially when they’re working for free!

But that’s not the whole story, of course. Mortgage brokers are free… to you, the borrower. But they are still paid. In fact, they get paid by the banks and lenders themselves. If you’re wondering why mortgage brokers are free, we’ve got all the answers for you.

Read on to find out why mortgage brokers are free, how they get paid by lenders and how this benefits you!

Why are mortgage brokers free?

Mortgage brokers do a lot of work for you as a borrower. They not only give you access to multiple lenders – we have over 40! – but they also go through each lender’s loan products to find the right loan for you. Then they prepare all the paperwork and even undertake negotiations if possible. All this work takes a lot of manpower.

So why don’t they get paid?

Well, as we’ve already mentioned, they do, of course, by the lenders. And one reason for this is because, from a monetary perspective, the lenders are the ones that getting the most out of the lending process. Because the lender is getting paid out of the deal, the mortgage broker gets a piece of that pie.

Does that mean that they won’t do their best for you? Absolutely not. Your mortgage broker – especially our expert team – is 100% on your side, working hard to get you the results you’re looking for. But once the loan is complete, their payment will come from the lender instead of from you. And because they’re already being paid by the lender, they don’t need to be paid by you – their customer – as well.

So, how are mortgage brokers paid?

In most cases your mortgage broker will be paid both an upfront commission and a ‘trail’ – or an ongoing commission – by the lender or bank. The commissions are paid out once your home loan has settled and are generally based on a percentage of the loan amount.

Each of these commission amounts will vary depending on the lender. But an upfront commission will typically be in the range of 0.3% to 0.7% as a one-off payment. And a trail commission might be between 0.165% to 0.275% per month. Your mortgage broker will receive this amount every month for the life of the loan.

Lenders pay trail commissions because they like long-term loans. And as long as you stay with the same mortgage and don’t fall into arrears or default, then they’ll continue to pay the broker a trail. This means that your broker has an added incentive to make sure they find you the best loan for you. And one that will allow you to make repayments easily for the long term.

Get home loan support today!

Now that we’ve tackled why mortgage brokers are free, it’s time to embrace that for your own benefit. Getting a home loan is easier, faster and more cost-effective than ever before. So whether you’re looking to refinance, or you’re a first home buyer, our experts are here to help.

Get in touch with our expert team and get a free personal home loan assessment today!