Mortgage Broker Trail Commission Explained 2026

Trail commission is a monthly payment a lender makes for as long as a loan you arranged stays open, calculated as an annual rate on the loan’s eligible balance. The Mortgage & Finance Association of Australia (MFAA) broker remuneration factsheet puts the rate at generally 0.15% a year, as at October 2026. Trail stops while a loan is in default or more than 90 days in arrears.

Upfront and trail commission are paid on different events. Upfront commission is a one-off payment after settlement, which the mortgage broker commission guide explains with the wider remuneration structure. Trail recurs every month, so each payment depends on that month’s balance, offset funds and contract terms.

When a trail payment differs from your loan-book figure, rebuild it from the lender’s balance date, the eligible balance and your agreement’s terms. The rebuilt figure shows whether the payment is wrong or the balance you expected was out of date.

Establish Trail Entitlement

Trail becomes payable under the agreements that link the lender to you, starting from a date and to a recipient those agreements name.

The Australian Securities and Investments Commission (ASIC) published Report 516 in March 2017. It found that lenders typically pay commission to the aggregator. The aggregator keeps a portion and passes the rest on to the broker business.

Each trail entitlement rests on two documents. The lender’s commission schedule with your aggregator sets the rate, the balance used and when trail starts. Your agreement with the aggregator sets your share, the payment date and who receives trail if the agreement ends.

Owning the right to trail on a loan is different from receiving a particular month’s payment. A loan can sit in your book under a valid agreement and still earn nothing that month. That happens when it’s in arrears, discharged, excluded by the schedule or recorded against another broker’s code.

When Trail Starts and Stops

Report 516 found that every lender surveyed paid trail monthly, as a monthly share of an annual percentage of the ongoing loan amount. Trail ceased once the loan was repaid. ASIC heard trail didn’t start until after the first year but found no such term in the lender agreements it reviewed.

Read these four points from the schedule and your agreement before you build an expectation for any loan.

1. The start date, such as the settlement date or the first drawdown.
2. The balance date, which is the day or averaging method the lender uses to measure the balance.
3. The recipient, meaning the aggregator and the broker code the loan is recorded against.
4. The payment date for each period, at the lender and then at your aggregator.

Report 516 also found two structures among lenders in March 2017. A flat trail pays the same rate for the life of the loan, while a tiered trail rises after set anniversaries. Every tiered schedule ASIC reviewed reached its top rate by year five, so check the loan’s anniversary before you assume the rate.

A Hypothetical Monthly Remittance

This hypothetical example rebuilds the trail on one loan for the period 1 to 30 September 2026. Loan L-40721 settled in March 2024 with a hypothetical lender whose schedule, effective 1 July 2026, pays a flat 0.15% a year in trail. Your hypothetical aggregator agreement passes on 95% of trail and adds 10% goods and services tax (GST).

The schedule uses the closing balance on the last day of each month, net of offset, as the balance date. The lender pays the aggregator by 31 October 2026, and the aggregator pays you on 15 November 2026.

Date	Event	Loan balance	Offset balance
31 August 2026	Opening position in your customer relationship management (CRM) system	$512,400	$18,000
12 September 2026	Borrower makes a $20,000 partial repayment	$492,400	$18,000
25 September 2026	Borrower’s annual bonus lands in the offset account	$492,400	$31,500
30 September 2026	Balance date, after $1,050 of scheduled principal repayments	$491,350	$31,500

The eligible balance on 30 September 2026 is $459,850, which is the $491,350 loan balance less $31,500 in offset. Trail for the period is $459,850 x 0.15% / 12, which gives $57.48 paid by the lender. Your 95% share is $54.61, and GST of $5.46 brings the 15 November payment to $60.07.

Step	Amount	Basis
Loan balance on the 30 September balance date	$491,350	Lender’s closing balance
Less offset balance on the same date	-$31,500	Schedule calculates trail net of offset
Eligible balance	$459,850	Balance used for the period
Lender’s trail for September 2026	$57.48	0.15% a year, divided by 12
Your share, excluding GST	$54.61	95% under your agreement
GST	$5.46	10% of your share
Paid to you on 15 November 2026	$60.07	Aggregator’s payment run

If you had expected trail on the $512,400 in your CRM, you’d look for $66.94 including GST. The $6.87 gap comes from the repayment, the principal reduction and the larger offset balance, none of which reached your CRM before the balance date.

Understand the Eligible Balance

The eligible balance is the amount the lender’s schedule applies the trail rate to, and it often sits below the loan balance you can see. Repayments, offset funds and contractual exclusions each reduce it, sometimes within days of the balance date.

Repayments and Redraw

Extra repayments lower the eligible balance as soon as they reach the loan. In Report 516, published in March 2017, every lender surveyed reduced the trail balance for extra repayments, including money sitting available in redraw. A borrower who builds a redraw buffer lowers your trail while the loan limit stays the same.

Offset Accounts

Offset funds are deducted from the loan balance before the rate applies. The MFAA factsheet says trail is paid on the outstanding balance net of any offset funds, as at October 2026. Offset balances move with the borrower’s pay, bills and savings, so trail on the same loan can change every month.

Check whether the schedule uses one day’s offset balance or an average. In the hypothetical loan above, a bonus deposited on 25 September cut that month’s trail because the balance date was 30 September.

Contractual Exclusions

The schedule decides which loans, loan parts and loan states earn trail at all. Under the MFAA factsheet, as at October 2026, trail isn’t paid while a loan is in default or more than 90 days in arrears. A schedule can also leave out particular products or split accounts, so match each loan part against it.

During a loan’s first year, the law caps the balance a percentage-based commission can be calculated on. The National Consumer Credit Protection Regulations 2010, in the compilation dated 5 September 2026, apply this drawdown cap to residential mortgages.

The cap covers benefits given within a year of first drawdown, but not reverse mortgages or lines of credit. Regulation 28VD sets that cap as the highest daily balance less offset during the year.

What you see	What the lender may use	Effect on trail
Loan limit in your CRM	Drawn balance on the balance date	Lower when the loan isn’t fully drawn or has been paid down
Loan balance on the lender’s portal	Balance less offset funds	Lower whenever the offset account holds money
Balance today	Balance on the schedule’s balance date	Higher or lower, depending on repayments and deposits since
Loan in arrears	No trail while the loan is more than 90 days in arrears	Nil until the loan is back within the schedule’s terms

Reconcile the Month

To reconcile a month of trail, match each loan on the statement to your loan book by its identifier, then compare the balance date, eligible balance, rate and period. The lender’s statement records what was paid, while your loan book holds what you expected, so start from each statement line.

Align the Statement With Your Loan Book

Line up these fields for every loan before you compare amounts.

1. Loan identifier. Use the lender’s account number, because a borrower name can match two loans and a split or internal refinance can create a new account.
2. Balance date. Confirm the date or averaging method the statement used, and pull your balance for that same date.
3. Eligible balance. Deduct offset funds and any excluded loan part before you apply the rate.
4. Rate. Use the schedule’s rate for the loan’s product and, for a tiered trail, its anniversary.
5. Payment period. Check which month the line pays for, since a November payment can cover September.

Recalculate each line in the same order as the worked example. Where your figure and the statement differ by more than rounding, sort the loan into one of the three cases below before you contact anyone.

Timing, Exclusion or Missing Payment

A difference in a month’s trail has one of three causes, and each needs a different response. Once confirmed, a timing or exclusion case is a correct payment that needs no enquiry.

Case	What you see	How to confirm it	What to do
Timing discrepancy	The line is lower, higher or absent, but appears in the next run or uses a different balance date	The period or balance date on the statement differs from the one you assumed	Update your expectation and recheck the next statement
Eligibility exclusion	The loan is listed at nil or omitted, and its balance or status explains it	Arrears over 90 days (MFAA factsheet, as at October 2026), discharge, an excluded loan part or a full offset balance	Record the reason against the loan, with no enquiry needed
Missing payment	No line for an open, eligible loan after the period’s payment date, or a line that doesn’t match the schedule	The loan is open, within terms and recorded against your code, but the calculation still differs	Send a targeted enquiry to your aggregator

A reversed entry is a negative line that cancels a trail amount paid in an earlier period. Read the period it reverses, then check whether the loan was discharged, went into arrears or had its balance corrected for that period. A reversal of upfront commission after an early discharge is a separate matter, which the broker clawback guide covers.

Send a Targeted Aggregator Enquiry

Raise missing, delayed or reversed trail with your aggregator’s commission team, because the aggregator receives the lender’s payment and holds the lender relationship. A precise enquiry lets the team check one loan against one lender file instead of searching your whole book.

Include these details for each loan.

• The lender’s loan account number and the borrower surname.
• The settlement date and the broker code the loan should sit under.
• The period and balance date in question.
• Your calculation, showing the balance, offset, eligible balance, rate and expected amount.
• The statement extracts, including the line you received or the statements where the loan is missing.
• For a reversal, the period reversed and the amount.

Ask the aggregator to confirm the lender’s balance, the reason for any exclusion and the expected payment date for any correction. Keep the reply with the loan’s records. If the agreement sets a timeframe or dispute process for commission queries, follow it once the aggregator has had the lender’s response.

Consider Transfer and Exit

When you leave an aggregator, your agreements decide whether trail on your existing book keeps paying you, stops or changes. The departing agreement’s termination clauses cover trail after you leave. Whether loans can move to another aggregator or broker code depends on the lender’s consent under its own agreement.

Read these terms in the departing agreement before you give notice.

• Whether trail continues to you after termination, and for how long.
• Conditions on continuing trail, such as clearing money you owe the aggregator or keeping your credit representative status.
• Fees or a reduced share the aggregator takes from trail it keeps paying you.
• Whether the agreement allows the book to move, and which consents that needs.

Get the outcome in writing for each lender before you lodge new loans elsewhere. The switch mortgage aggregator guide sets out the full sequence, including how to reconcile trail statements from both aggregators during the move.

Keep Client Reviews Visible

When trail rights change, the client still needs a named broker for reviews, so record who that is for every loan. A client whose fixed rate expires next month needs someone to contact them, whichever business now receives the trail.

For each loan, record three facts in a register both businesses can see.

• The broker who follows up the client at an expiring fixed rate, rate change or requested review.
• Where the prior advice record sits, and who can access it after the change.
• The date responsibility moved, so a missed review can be traced.

ASIC’s Regulatory Guide 273 (RG 273), issued 24 June 2020, says record retention depends on factors such as the loan term and whether the client refinances. Keep the records where the broker reviewing the loan can read the original recommendation and its reasons, even after an aggregator change. Selling a book of trail involves a valuation, which the trail book guide covers separately.

RG 273 applies the best interests duty to any suggestion that a client remain in their current loan. A fixed-rate expiry review that ends with that suggestion is covered.

When you review that client’s options, Bulma’s Policy Advisor answers lender policy questions across 52+ lenders. Each answer quotes the policy wording it relied on, which you can keep in the file note.