What Fees Do Mortgage Brokers Charge in NZ?

What Fees Do Mortgage Brokers Charge in NZ?

How We Researched This Guide

We started with the Financial Markets Authority's guidance on mortgage advice, which sets out plainly how most advisers are paid: an upfront payment from the lender as a percentage of the loan, and sometimes an ongoing commission while you hold the loan. We then read published disclosure statements from advisory firms to see what those percentages look like in practice.

That is where it got interesting. Published disclosure statements put upfront commission at roughly 0.55% to 0.90% of the loan value, and trail commission at 0% to about 0.15% of the remaining balance each year. We also found one statement capping a clawback recovery fee at the lower of the actual clawback amount or 0.50% of the balance repaid — a useful example of how disclosure actually reads. The honest finding: there is no official survey of broker fees in New Zealand, so anyone quoting a single "average" is making it up.

The relevant legal duties are set out in full on legislation.govt.nz.

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The Quick Summary (60-Second Version)

If you only read one part of this, read this list.

• For a standard residential home loan, the borrower usually pays no broker fee — the lender pays instead.
• Published disclosure statements show an upfront commission of roughly 0.55% to 0.90% of the loan value.
• Trail commission runs from 0% to about 0.15% of the remaining balance each year, also paid by the lender.
• If you repay or move the loan within a set period, the lender can claw back the adviser's commission, and the adviser may pass that cost to you.
• A cashback to you carries its own clawback, commonly two to four years, and is separate from the adviser's commission clawback.
• Advisers must disclose how they are paid and when a fee applies — ask before you sign anything.

How Mortgage Brokers Actually Get Paid

The FMA's position is straightforward. Most mortgage advisers work on commission. They usually receive a payment from the lender as a percentage of the total loan amount when the loan is drawn down, and may also receive an ongoing periodic commission while you hold the loan.

Sometimes an adviser charges you a fee directly, instead of, or in addition to, the lender's commission. That is not the norm for a standard home loan, but it happens. The disclosure duty is what protects you here: advisers must tell you how they are paid, how much you will need to pay, and the circumstances in which a fee or additional fee arises.

This model has a real conflict built in. The FMA states plainly that commissions can vary across lenders, that some lenders pay higher commissions than others, and that this could influence the loans recommended. The counterweight is the requirement that advisers always prioritise your interests over their own.

What happens if you leave early

If the loan ends or moves to another lender within a certain period, the lender may recoup some or all of the commission it paid your adviser. The adviser may then charge you a fee where that has happened. The FMA says advisers must tell you up front about situations where a clawback fee will be charged.

One published disclosure statement we read caps a clawback recovery fee at the lower of the actual commission clawback amount or 0.50% of the balance repaid, and refers to early repayment within the first 27 months. Treat that as an example of how one firm discloses it, not as a market standard.

Cashback is a separate thing

Cashback is a lump sum a lender may pay you for taking out a new mortgage or refinancing from another lender. Published material commonly puts it at around 0.5% to 1% of the loan amount. Lenders typically don't pay it for simply refixing with the same bank.

Every cashback carries a clawback period, commonly two to four years. Lenders differ on how the repayment steps down. Critically, the FMA notes that cashback payments to you and commission clawback payments to your adviser are different things — moving early can trigger both.

What You Might Actually Pay For

For most borrowers, nothing. But in some situations, a fee appears, and it is worth knowing about it before you engage anyone.

Complex or non-standard lending

Self-employed income, non-resident buyers, unusual security, or a credit history that needs explaining all take more work than a PAYE application. Some advisers charge for that time, or the commission may not cover it. The disclosure statement is where this has to be spelled out.

Low loan amounts

Commission is calculated on the loan value, so a small loan produces a small payment. Where the commission will not cover the work, some advisers charge the borrower instead. Again, this must be disclosed before you proceed.

The costs that dwarf any fee

That last row deserves attention. Westpac's own help page describes a low equity margin as typically between 0.25% and 1.5% per annum added to the rate when you borrow more than 80% of the property's value. On a $600,000 loan, a 0.75% per annum margin costs about $4,500 a year in extra interest. That is the arithmetic of the principal, not a quote from any lender — but it shows why a broker's fee is rarely the expensive part of a mortgage.

Break fees work the same way. If rates have fallen since you fixed, the break fee can be large. If rates have risen since you fixed, it is typically zero or negligible. Many borrowers assume the opposite.

Questions You Might Have

Do I pay GST on a broker's fee?

If an adviser charges you directly, the fee is a business charge and GST treatment follows the usual rules. The practical point is to ask whether a quoted figure includes GST, because a fee quoted exclusive can land noticeably higher. Get it in writing in the disclosure statement.

Can a broker charge a fee and still take commission?

Yes, that is possible where the loan is small, or the application is complex. The FMA's position is that advisers must disclose how they are paid, how much you will pay, and when a fee or additional fee arises. If that is not clear before you commit, ask again.

What if I refinance within a couple of years?

Two things can bite. The lender may claw back the commission it paid your adviser, and your adviser may pass that cost to you. Separately, if you took a cashback, you may have to repay all or part of it.

Ask for both numbers before you move.

Is a broker's recommendation biased?

The FMA acknowledges that commissions vary across lenders and that some pay more than others, which could influence recommendations. Advisers must prioritise your interests over their own. A useful check is to ask which lenders on their panel pay them the most, and why they chose the one they did.

Can a broker help with a First Home Loan?

Yes. A broker can assess Kāinga Ora First Home Loan eligibility at no cost to you, because the lender pays the broker. That scheme needs only a 5% deposit, and instead of a low equity margin, you pay a 1.2% Lender's Mortgage Insurance premium.

What Matters Most

No official New Zealand survey of mortgage broker fees exists. Anyone presenting a single "average broker fee" is inventing it. The honest framing is that for a standard residential home loan you usually pay nothing, because the lender pays the broker — and that is exactly why the disclosure rules exist.

So focus your attention where the money actually is. Compare the rate over the full term you are fixing for, not just the headline. Check the clawback period on any cashback and measure it against the rate difference across those years. And if you are thinking about refinancing, get a break fee quote first, because it can wipe out the benefit entirely.

Ask about fees up front, read the disclosure statement, and treat vagueness as a warning sign. The broker's fee is rarely the problem. The commitment period usually is.