How Mortgage Brokers Get Paid in New Zealand

If you're buying a home or refinancing in New Zealand, you might wonder how mortgage brokers get paid — and whether their services cost you anything. The short answer is: usually nothing directly. But the full picture is a little more nuanced.

Most New Zealand mortgage brokers are paid by the lender, not by you. This means you can often access their expertise for free. However, the way brokers are compensated can influence the options they present. Understanding these payment structures helps you make an informed choice.

Key Concepts: How Brokers Earn Their Income

Mortgage brokers in New Zealand typically earn income through two main channels: upfront commissions and trail commissions. Some also charge fees directly to borrowers in specific situations.

Upfront Commissions

When a broker helps you secure a home loan, the lender pays them an upfront commission. This is usually a percentage of the loan amount — typically between 0.65% and 1.00% of the loan. For a $600,000 mortgage, that could be between $3,900 and $6,000.

This commission is paid by the lender, not by you. It covers the broker's work in assessing your situation, comparing lenders, and managing the application process.

Trail Commissions

Many lenders also pay brokers an ongoing trail commission — a small annual fee (usually around 0.15% to 0.25% of the loan balance) for as long as the loan remains active. This compensates the broker for ongoing service and support.

Trail commissions are paid monthly or annually. For a $600,000 loan, that's roughly $900 to $1,500 per year. Some brokers rebate part of this to clients, though this is not standard practice in New Zealand.

Direct Fees (Less Common)

Some brokers charge a direct fee to clients — particularly for complex loans, self-employed borrowers, or if you're using a service that doesn't pay a commission. These fees are typically disclosed upfront and can range from $500 to $2,000 or more.

Brokers must disclose any fees in writing before you proceed. Always ask about fees during your first conversation.

Pros and Cons of Using a Mortgage Broker

Pros Cons
Access to multiple lenders (often 15–20+) Not all brokers have access to every lender
No direct cost to you in most cases Commissions may influence which lenders are recommended
Expert guidance through the application process Some brokers may prioritise lenders with higher commissions
Can save you time comparing options You still need to do your own research on loan terms
Ongoing support (especially with trail commissions) Not all brokers offer the same level of post-settlement service

Key Features to Look for in a Mortgage Broker

  • Lender panel size — How many lenders do they work with? More options = better chance of finding the right deal.
  • Fee transparency — Do they clearly explain how they're paid? Do they charge any direct fees?
  • Experience and qualifications — Look for brokers registered with the Financial Markets Authority (FMA) and who hold relevant qualifications.
  • Reviews and referrals — Check Google reviews, Facebook, or ask friends and family for recommendations.
  • Specialisation — Some brokers focus on first-home buyers, self-employed borrowers, or investment properties. Choose one that matches your situation.

Who Should Use a Mortgage Broker?

Mortgage brokers are a good fit for most home buyers and refinancers in New Zealand. They're especially useful if:

  • You're a first-home buyer and don't know where to start
  • You're self-employed or have a complex income situation
  • You want to compare multiple lenders without doing all the legwork
  • You're refinancing and want to find the best rate or structure
  • You're time-poor and prefer someone to manage the process

However, if you're very experienced with mortgages and prefer to deal directly with a specific bank, you may not need a broker.

Step-by-Step Guide: What to Expect When Using a Mortgage Broker

  1. Research and choose a broker — Look for someone with good reviews, relevant experience, and access to a wide panel of lenders.
  2. Initial consultation (free) — The broker will ask about your income, expenses, savings, and goals. They'll also explain how they're paid.
  3. Pre-approval process — The broker will assess your borrowing capacity and submit applications to suitable lenders. You'll receive a pre-approval letter.
  4. Property search — Once pre-approved, you can start house hunting. The broker can advise on how different properties might affect your loan.
  5. Full application — After you find a property, the broker helps you submit a full loan application with supporting documents (pay slips, bank statements, etc.).
  6. Settlement — The broker coordinates with the lender, your lawyer, and the real estate agent to ensure everything goes smoothly.
  7. Post-settlement support — Many brokers check in with you after settlement and can help with future refinancing or top-ups.

Tips for Getting the Most Out of Your Broker

  • Be upfront about your finances — The more honest you are, the better advice they can give.
  • Ask about commission structures — It's fine to ask: "Which lenders pay you the most?" A good broker will be transparent.
  • Compare offers yourself — Use a mortgage calculator or check bank websites to see if your broker's recommendation stacks up.
  • Check for fees — Confirm in writing whether there are any direct fees before you proceed.
  • Don't be afraid to switch — If you're not happy with your broker, you can always try another one.

Our Verdict

Mortgage brokers are a valuable resource for most New Zealand home buyers and refinancers. They save you time, provide expert guidance, and usually cost you nothing directly. The key is to choose a broker who is transparent about how they're paid and who has access to a wide range of lenders.

While commission structures can create a potential conflict of interest, a good broker will prioritise your needs over their own commission. Always do your own research and compare offers before committing.