Mortgages with JJMortgage advisers in New Zealand are typically paid by the lender, not by you. When you work with a mortgage adviser like me, there is usually no cost to you as the borrower — the bank or lender that writes your loan pays the adviser a commission for bringing them your business.
This model has been the standard in New Zealand for decades, and it means you get access to professional mortgage advice, lender comparison, and application support without writing a cheque for the service.
But I know that raises questions. If the lender pays, whose side is the adviser really on? How does the commission structure work? Are there ever fees? And does using an adviser mean you pay more interest or get a worse deal?
Let me walk you through exactly how mortgage adviser payment works in New Zealand, what it means for you, and why the model exists the way it does.
How does lender-paid commission work?
When a mortgage adviser arranges a home loan for you and it settles, the lender pays the adviser a commission. This is usually structured as an upfront commission based on the loan amount, plus in some cases a trailing commission paid over the life of the loan as long as it remains active.
The upfront commission is a percentage of the loan value and is paid once the loan settles. The trailing commission, if applicable, is a smaller ongoing percentage paid annually or monthly while the loan is in place.
The exact commission rates vary by lender and by the type of loan. Different banks have different commission structures, and these can change over time. Some lenders pay higher commissions than others, and some product types attract different rates.
Importantly, the commission comes out of the lender’s margin — it is not added to your interest rate or your loan amount. You do not pay more interest because you used an adviser. The lender has already budgeted for distribution costs, whether that is paying an adviser, running their own branch network, or advertising directly to customers.
In fact, advisers often secure the same or better rates than you would get going direct to a bank, because advisers bring volume and the lender wants the business.
Does using a mortgage adviser cost me anything?
In the vast majority of cases, no. Most mortgage advisers in New Zealand operate on the lender-paid commission model and do not charge the borrower a fee.
This applies whether you are a first home buyer in Orewa, refinancing your existing mortgage, or buying an investment property. The service — comparing lenders, structuring your application, managing the paperwork, liaising with the bank — is provided at no direct cost to you.
There are some exceptions. A small number of advisers do charge a fee for service, either instead of or in addition to lender commission. This is more common in complex scenarios like large commercial lending, or where an adviser is providing strategic financial planning beyond standard mortgage placement.
If an adviser does charge a fee, they must disclose it upfront before you engage them. It is a legal requirement under the Financial Markets Conduct Act. You will know before you proceed.
I operate on the standard lender-paid model. My clients on the Hibiscus Coast and across Auckland do not pay me a fee. The lender pays the commission once your loan settles, and that is how I am remunerated for the work.
If the lender pays you, are you working for them or for me?
This is the most common concern people raise, and it is a fair question. If the bank is paying the adviser, does that create a conflict of interest?
The answer is no, and here is why. Under New Zealand financial advice law, mortgage advisers are required to put your interests first. We have a legal duty to act in your best interests, not the lender’s. This is called the client-first duty, and it applies regardless of who pays the commission.
That means I cannot recommend a lender just because they pay a higher commission. I have to recommend the lender and structure that is most suitable for your situation — your income, your deposit, your goals, your timeline.
If a lender pays me slightly more but is not the right fit for you, I cannot ethically place you there. If I did, and it came to light, I would be in breach of my obligations and could lose my licence.
The Financial Markets Authority (FMA) oversees this. Advisers are audited. Complaints are investigated. The regulatory framework is designed specifically to address the potential conflict that lender-paid commission creates.
In practice, most advisers I know take this seriously because our reputation depends on it. If I put clients into the wrong loan because it paid me more, word would get around fast — especially in a tight-knit community like the Hibiscus Coast. My business is built on referrals and repeat clients. I have no incentive to compromise that for a marginally higher commission on one deal.
The other structural safeguard is that commission rates across lenders are not wildly different. They vary, but not enough to make it worth torching your professional reputation. The difference between lenders is usually more about which one will actually approve your application and give you the best terms, not which one pays the adviser the most.
What does a mortgage adviser actually do for that commission?
A good mortgage adviser does a lot more than just submit your application to a bank. The value is in the strategy, the structure, and the navigation.
First, I assess your situation. Income, employment type, deposit source, existing debts, credit history, goals. I work out what you can borrow, not just in theory but in practice with real lenders under current policy.
Then I compare lenders. Not just on interest rate, but on policy fit. Some banks are more flexible on certain income types. Some are more open to lower deposits right now. Some have better construction lending processes. Some have clawback periods that matter if you might refinance soon. I know which lender is most likely to say yes to your specific scenario, and I know which one will give you the best terms.
I structure the application. That means presenting your income and expenses in the way that maximises your borrowing power. It means choosing the right loan structure — offset, revolving credit, fixed terms, splits. It means timing the application so you are not caught out by policy changes or lender appetite shifts.
I manage the process. I submit the application, I chase the bank, I coordinate with your solicitor and real estate agent, I make sure conditions are met and the loan settles on time. If something goes wrong — valuation comes in low, bank asks for more information, unconditional date is looming — I solve it.
And I do this for first home buyers in Silverdale who have never seen a mortgage document before, and for experienced investors in Millwater refinancing a portfolio. The commission model means everyone gets the same level of service regardless of how simple or complex their situation is.
If I charged by the hour, a first home buyer with a straightforward application might pay less, but someone with a tricky income situation or a complex refinance would pay a lot more. The lender-paid model smooths that out. Everyone gets access to advice.
Are there situations where commission does not apply?
Yes. If you do not proceed with a loan, the adviser does not get paid. Commission is only paid on settlement. If your application is declined, or you pull out, or you decide not to buy, the adviser has done the work but receives no commission.
This is a risk advisers carry. It is part of the business model. It also means advisers are motivated to get your application across the line, which aligns with your interest — you both want the loan to settle.
There are also some niche lending scenarios where lender-paid commission does not apply or is very low. Some private lenders or non-bank lenders have different commission structures, or none at all. In those cases, an adviser might charge a fee to cover their time. Again, this would be disclosed upfront.
If you are refinancing and there is a clawback period still active on your existing loan, that can affect adviser payment too. Clawback means if you refinance away from a lender within a certain period after settling — often two years — the original adviser has to repay some or all of the commission to that lender. If you are moving lenders during a clawback period, a new adviser taking on your refinance knows they will be paid by the new lender, but your original adviser might be paying money back. It does not cost you anything, but it is part of the mechanics advisers navigate behind the scenes.
Does the commission model mean I get worse interest rates?
No. This is a myth that persists, but it is not how the model works.
The interest rate you are offered is based on your borrowing profile, the lender’s current pricing, and sometimes the loan structure or term you choose. It is not based on whether you came through an adviser or walked into a branch.
In fact, mortgage advisers often secure better rates than branch customers because advisers bring volume to lenders and have relationships with bank business development managers. If a lender wants to win business from an adviser who writes a lot of loans, they will sharpen their pricing.
I have seen clients come to me after getting a rate from their own bank, and I have placed them with the same bank at a better rate just by going through the adviser channel and negotiating. The bank wants the deal, and they know I have other options.
The commission the bank pays me does not come out of your pocket. It comes out of the bank’s margin. They have already factored distribution costs into their business model. Whether they pay an adviser, pay a branch manager’s salary, or spend money on advertising, they are paying to acquire customers. The adviser channel is just one of those distribution costs.
You are not subsidising the adviser’s commission by paying a higher rate. You are getting access to advice and lender comparison at no cost, and often getting a better outcome than you would have on your own.
What should I ask a mortgage adviser about how they get paid?
You are entitled to know. In fact, advisers are required to disclose how they are remunerated before you engage them.
Ask whether they charge a fee or work on commission. If they work on commission, ask whether commission rates differ between lenders and how they manage that. A good adviser will be transparent about it.
You can also ask whether they are restricted to a panel of lenders or have access to the full market. Some advisers work under aggregator models or franchise groups that limit which lenders they can place with. Others, like me, have access to the whole market. That can affect the range of options you are presented with.
If you are doing something unusual — construction lending, large loan, non-resident borrower — ask upfront whether there will be a fee. Most of the time there will not be, but it is worth confirming.
And if you are refinancing within a couple of years of your last mortgage, mention it. The adviser needs to know if there is a clawback in play, because it can affect timing and strategy.
Key takeaways
- Mortgage advisers in New Zealand are typically paid by the lender through commission, not by the borrower.
- You usually pay nothing to use a mortgage adviser — the service is free to you, funded by lender commission on settlement.
- Advisers are legally required to act in your best interests, regardless of who pays the commission.
- The commission does not increase your interest rate or loan cost — it comes out of the lender’s distribution budget.
- Advisers must disclose their remuneration structure upfront, and you are entitled to ask how they get paid.
- Using an adviser often results in better rates and outcomes than going direct, because advisers have market access and negotiating relationships.
- If an adviser does charge a fee, it must be disclosed before you engage them, and this is rare in standard residential lending.
Why the model works for borrowers
The lender-paid commission model has been criticised overseas, particularly in Australia and the UK, where regulators have questioned whether it creates conflicts of interest. Some countries have moved toward fee-for-service models or banned commission altogether.
New Zealand has taken a different approach. Rather than banning commission, we have strengthened the regulatory framework around it. The client-first duty, mandatory disclosure, and FMA oversight are designed to ensure that commission does not compromise advice quality.
And for most borrowers, the model works well. It means you get professional advice without upfront cost. It means a first home buyer in Red Beach with limited savings does not have to choose between paying an adviser or going it alone. It means you can get your mortgage structured properly, with someone in your corner who knows the market, without adding another bill to an already expensive process.
The key is transparency. As long as you know how your adviser is paid, and as long as they are held to a legal standard of putting your interests first, the model delivers value.
Frequently asked questions
Do I pay more interest if I use a mortgage adviser?
No. The interest rate you are offered is based on your borrowing profile and the lender’s pricing, not on whether you used an adviser. Advisers often secure the same or better rates than going direct because they bring volume to lenders and have negotiating relationships.
Can a mortgage adviser charge me a fee as well as earning commission?
In theory yes, but it is very rare in standard residential lending in New Zealand. Most advisers work purely on lender-paid commission. If an adviser does charge a fee, they must disclose it upfront before you engage them.
If the bank pays the adviser, how do I know they are not just sending me to the highest-paying lender?
Advisers are legally required to act in your best interests under the Financial Markets Conduct Act. Recommending a lender based on commission rather than suitability is a breach of that duty and can result in loss of licence. The regulatory framework and reputational risk keep advisers honest.
What happens if my mortgage application is declined — does the adviser still get paid?
No. Commission is only paid when the loan settles. If your application is declined or you do not proceed, the adviser does not receive any payment from the lender, even though they have done the work.
Do all mortgage advisers have access to the same lenders?
Not always. Some advisers work under franchise or aggregator models that limit their lender panel. Others have access to the full market. It is worth asking upfront which lenders an adviser can place with.
Is using a mortgage adviser really free, or is there a catch?
It is genuinely free in the vast majority of cases. The lender pays the adviser a commission once your loan settles, and that cost is not passed on to you. There is no catch, but you should always ask upfront how the adviser is remunerated so you know exactly how the relationship works.
Bank commission structures, lender appetite, and regulatory settings all shift over time. If you are buying your first home on the Hibiscus Coast, refinancing in Whangaparaoa, or restructuring anywhere in Auckland and want to understand how your specific situation would be handled, get in touch. I will walk you through it with no cost and no obligation.
JJ van der Westhuizen (FSP1000031) is a Senior Mortgage Adviser operating under the FAP licence of Mortgage Design Limited (FSP752291). This article is general information only and does not constitute personalised financial advice. Specific lender policies, government scheme thresholds, and interest rates change frequently — for advice tailored to your situation, please get in touch.