What Fees Do Mortgage Brokers Charge in NZ?

If you're buying a home or refinancing, you might wonder whether using a mortgage broker will cost you. The good news is that most mortgage brokers in New Zealand do not charge borrowers directly. Instead, they earn a commission from the lender. But there are exceptions, and it pays to understand the full picture before you engage a broker.

This guide explains the typical fees, when you might be charged, and how to avoid surprises. We'll also cover the pros and cons of using a broker versus going direct to a bank.

Key takeaway: Most mortgage brokers in NZ are free for borrowers — they are paid by lenders via commission. However, some brokers charge fees for complex loans, self-employed applications, or low-value mortgages. Always ask upfront.

How Mortgage Brokers Are Paid in New Zealand

Mortgage brokers are typically remunerated in two ways:

  • Upfront commission — a percentage of the loan amount (usually 0.6% to 1.0%), paid by the lender when the loan settles.
  • Trail commission — an ongoing annual fee (typically 0.1% to 0.3% of the loan balance), paid by the lender for as long as the loan is active.

Because brokers receive these payments from banks and non-bank lenders, they can offer their services to you at no direct cost. But this model isn't universal — some brokers charge client fees in specific situations.

When Might a Mortgage Broker Charge You a Fee?

While most brokers are free, you may encounter fees in these scenarios:

  • Low loan amounts — If your loan is under $200,000–$300,000, the commission may not cover the broker's time. Some brokers charge a flat fee (e.g., $500–$1,500) to make it worthwhile.
  • Complex applications — Self-employed borrowers, non-residents, or those with bad credit may require extra work. A broker might charge a project fee (e.g., $1,000–$2,500).
  • Commercial or specialist lending — Business loans, construction finance, or bridging loans often involve more paperwork. Fees can range from $1,500 to $5,000 or more.
  • Brokerage fee — A small number of brokers charge a flat retainer or hourly rate. This is rare but worth asking about.

Always request a "Fee Disclosure Statement" before proceeding. This document is required by law and must outline all costs you may incur.

Typical Fee Ranges for NZ Mortgage Brokers

Fee Type Typical Amount Who Pays?
Upfront commission (lender) 0.6% – 1.0% of loan amount Lender
Trail commission (ongoing) 0.1% – 0.3% of balance per year Lender
Client fee (low loan amount) $500 – $1,500 Borrower
Client fee (complex application) $1,000 – $2,500 Borrower
Client fee (commercial/specialist) $1,500 – $5,000+ Borrower
Broker retainer/hourly fee $150 – $400 per hour Borrower

Note: These are indicative ranges. Always check with the broker for exact figures.

Pros and Cons of Using a Mortgage Broker

Pros

  • Free for most borrowers — You get expert advice without direct cost.
  • Access to multiple lenders — Brokers can compare dozens of banks and non-bank lenders, including those you can't access directly.
  • Time-saving — They handle paperwork, negotiate rates, and chase lenders.
  • Specialist knowledge — They can help with tricky situations like self-employed income or bad credit.
  • Ongoing support — Many brokers review your loan annually and help with refinancing.

Cons

  • Limited lender panel — Some brokers only work with certain lenders, so you might miss the best deal.
  • Potential conflicts of interest — Brokers earn higher commissions from some lenders, which could influence their recommendations.
  • Fees for complex cases — If your application is unusual, you could pay a significant fee.
  • Not all lenders are covered — Some banks (e.g., Kiwibank) don't pay commissions, so a broker may not recommend them.
  • Less control — You rely on the broker to communicate with the lender; delays can occur.

Step-by-Step: How to Engage a Mortgage Broker Without Hidden Fees

Follow these steps to ensure you understand what you're paying — or not paying — when using a broker.

Step 1: Research and shortlist brokers

Look for brokers who are members of the New Zealand Mortgage Brokers Association (NZMBA) or the Financial Services Federation (FSF). Check online reviews and ask friends or family for recommendations.

Step 2: Ask about fees upfront

When you first contact a broker, ask directly: "Do you charge any fees to borrowers? If so, when and how much?" A reputable broker will answer clearly.

Step 3: Request a Fee Disclosure Statement

Under the Credit Contracts and Consumer Finance Act (CCCFA), brokers must provide this document before you agree to proceed. It lists all commissions and any fees you may need to pay.

Step 4: Compare quotes from multiple brokers

Don't settle for the first broker you speak to. Get quotes from 2–3 brokers and compare their lender panels, interest rates, and any fees.

Step 5: Read the fine print

Check the disclosure statement for clauses about early repayment fees, break costs, or trail commission clawbacks (if the loan is paid out early, the broker may ask you to cover their lost commission).

Step 6: Ask about trail commission

Some brokers rebate part of their trail commission to you. This is rare but worth asking about — it could save you a few hundred dollars per year.

Common Questions About Mortgage Broker Fees

Can a broker charge both a commission and a client fee?

Yes, in some cases. If the loan amount is small or the application is complex, the broker may charge a client fee on top of the lender commission. This must be disclosed upfront.

Do I pay GST on broker fees?

If a broker charges you a fee directly, GST (currently 15%) is usually added. Check whether the quoted fee includes GST or is exclusive.

What if I'm unhappy with the broker's service?

You can complain to the broker's dispute resolution scheme (they must belong to one, such as the Financial Services Complaints Ltd (FSCL) or the Insurance & Financial Services Ombudsman (IFSO)). You can also contact the Commerce Commission if you suspect unfair practices.

Verdict: Should You Use a Mortgage Broker?

For most New Zealand borrowers, using a mortgage broker is a smart move — especially if you're a first-home buyer, self-employed, or want to compare multiple lenders without doing the legwork yourself. The service is typically free, and brokers can often secure better rates than you'd get walking into a bank.

However, always ask about fees upfront, especially if your loan is small or your situation is complex. A transparent broker will happily explain their fees and provide a disclosure statement. If they're vague or evasive, consider it a red flag.

Bottom line: Mortgage brokers in NZ are generally free for borrowers, but fees can apply in specific circumstances. Know what you're signing up for, and you'll get expert help without breaking the bank.