How New Zealand mortgage advisers are paid: upfront and trail commission from lenders, when a client fee applies, clawback windows, and what the FSLAA disclosure rules require.
Most New Zealand borrowers pay their mortgage adviser nothing. The bank pays the adviser a commission when the loan draws down, and in many cases a small ongoing trail while the loan stays on the books. Client-paid fees exist but are the exception rather than the rule.
How advisers are paid
- Upfront commission: paid by the lender on drawdown, typically a percentage of the loan amount
- Trail commission: a small ongoing percentage of the outstanding balance, paid by some but not all lenders
- Client fee: charged in complex, non-bank or clawback-affected cases, and disclosed in advance
- Adviser group split: where the adviser operates under a FAP or group, a share is retained
Because the lender pays, the borrower generally gets the same advertised rate whether they go direct or through an adviser — the adviser's value is in the comparison, structure and negotiation, not in a discount unavailable elsewhere.
Clawback is the risk that shapes behaviour
If a loan is repaid or refinanced away within the lender's clawback period — commonly the first 24 to 27 months, and among the longest windows in comparable markets — the lender can reclaim some or all of the upfront commission. That is why some advisers charge a client fee where a short hold is likely, and why keeping in contact through the clawback window is an economic necessity, not just good service.
"In a market with two-year clawback windows and short fixed terms, an adviser who loses contact after drawdown is exposed twice: to the clawback, and to the refix going to the bank."
Disclosure obligations
Under the financial advice regime, advisers must disclose commissions, fees and any conflicts of interest to clients at the relevant points in the advice process, and must prioritise the client's interests. In practice that means the commission conversation is a required part of the file, so having the record generated as a by-product of the advice — rather than reconstructed later — saves real time.
Frequently asked questions
- Do mortgage advisers in NZ charge a fee? Usually not for standard bank lending; fees appear in non-bank, complex or short-hold cases.
- How much commission does a mortgage adviser make? A percentage of the loan on drawdown, plus a small trail from some lenders.
- Does using an adviser cost more? No — the rate is set by the lender, not the channel.
- What is clawback? The lender reclaiming commission if the loan is repaid early, commonly within about two years.
- Do advisers get paid when I refix? Typically not by the bank on an internal refix, which is one reason refinancing conversations matter.
Commission rates, trail and clawback terms differ by lender and adviser group. Confirm the current figures in your own agreements. This is general information, not financial advice.