Quick Answer: Mortgage advisers in NZ are typically paid entirely by the lender, not the borrower - a commission of roughly 0.50-0.85% of your loan amount once it settles, plus sometimes a smaller ongoing trail commission of around 0.15% a year while the loan remains with that lender.
How the Commission Actually Works
For residential home loans in NZ, mortgage advisers typically charge borrowers $0 directly - they earn their income from a commission paid by the lender once your loan is approved and settled. This upfront commission usually ranges between 0.50% and 0.85% of the loan amount, meaning on a $600,000 loan, the adviser might earn somewhere between $3,000 and $5,100 from the bank, not from you.
Trail Commission and Clawback
Some lenders also pay advisers an ongoing trail commission, a smaller annual percentage - often around 0.15% - of your remaining loan balance for as long as your loan stays with that bank. This is designed to reward advisers for placing borrowers in a loan that suits them long-term, rather than just chasing an upfront payout.
There's a catch that protects lenders from advisers switching clients too quickly: if you refinance away from that lender within roughly 12-24 months, the lender can claw back some or all of the adviser's upfront commission. This is a factor between advisers and lenders - it doesn't cost you anything directly, but it's worth understanding why an adviser might ask about your longer-term plans.
Common Questions, Answered
Quick Summary
- Advisers are paid by the lender, typically 0.50-0.85% of your loan upfront.
- Trail commissions of around 0.15% a year sometimes apply on top.
- Clawback protects lenders if you refinance away within 12-24 months.
- Any direct borrower fee must be disclosed in writing by law.