Zero Hidden Costs For Using A Mortgage Broker....really?!

The short answer is YES.

For the vast majority of standard home loans in Australia, there are no hidden costs or fees that you pay to a mortgage broker. Their service is provided to you at no direct charge.

However, to give you complete confidence, let's break down how it works, address potential exceptions, and discuss the "indirect costs" you should be aware of.

The Standard Model: How Your Broker is Paid

In a typical home loan transaction, the lender you choose pays the mortgage broker, not you. This payment is called a commission and it happens after your loan has successfully settled. It usually has two parts:

1. Upfront Commission: A one-time payment based on the size of the loan.

   
   

2. Trail Commission: A smaller, ongoing annual payment for as long as you keep the loan.

   
   

Crucially, this commission does not make your loan more expensive.

The interest rate and fees you are offered are the same (and sometimes better due to broker negotiations) as if you had gone directly to that same lender. The lender pays the broker from their own profit margin as a cost of acquiring a new customer.

Legal Protection: The Best Interests Duty

Worried that a broker might recommend a loan that pays them a higher commission? The law is on your side.

Since 2021, mortgage brokers in Australia have a legal obligation called the Best Interests Duty (BID).

This law legally requires them to:

• Act in your best interests when providing advice.

• Prioritise your needs and circumstances above their own, including any commissions they might earn.

  
  

Brokers must also provide you with a Credit Guide at the beginning of your conversation, which clearly outlines how they are paid and lists the lenders on their panel. This transparency is a legal requirement.

So, Are There Any Scenarios with Costs?

While not "hidden," there are a few specific, non-standard situations where a fee might apply. A reputable broker will always disclose these to you upfront.

1. Fee-for-Service

• What is it? In some highly complex situations, such as for sophisticated commercial property loans, short-term bridging finance, or some specialist SMSF loans, a broker may charge a fee for their service.

  
  

• Is it hidden? Absolutely not. This would be clearly detailed in a formal agreement or quote that you must sign before any work begins. For a standard residential home loan or refinance, this is extremely uncommon.

  
  

2. Cancellation or "Break" Fees

• What is it? Some brokers may include a clause in their service agreement that allows them to charge a fee if you withdraw your application at the very last minute after they have done all the work and secured an unconditional approval for you. This is to compensate them for their time.

  
  

• Is it hidden? No. This policy, if it exists, must be clearly disclosed in the documents you sign at the start. Many brokers do not charge this fee, but it's something to check for in the initial agreement.

  
  

The Verdict: Are There Hidden Costs?

For the overwhelming majority of borrowers seeking a standard home loan, the answer is no. The system is designed so that you get access to expert advice and choice without having to pay for it directly.

Your best protection is transparency. A good broker will be upfront about how they're paid, happy to answer your questions, and focused on finding the best outcome for you.

Give ufirst Finance a call and we can talk you through this in more detail, to give you the confidence in our no-obligation, fee-free model.

Contact Us