A quick heads-up: The information in this article is designed as a general educational guide only and does not constitute personalised financial, tax, or legal advice. Because everyone's situation is unique (and bank policies change frequently), we recommend speaking with a licensed Financial Adviser to see how this applies to your specific circumstances. For full transparency on our terms of service, how we are remunerated by lenders, and any specific situations where a fee may apply, please read How We Get Paid.
When you start your property journey in New Zealand, you will almost certainly hear the exact same piece of advice from friends, family, and property podcasts: "Use a mortgage adviser."
And almost immediately, a very logical question pops into the minds of most buyers: "Wait, if this service doesn't cost me anything out of pocket, how do they actually make money? What is the catch?"
It is a completely fair question. Historically, the financial industry hasn't always been great at pulling back the curtain on how it operates.
Let's break down exactly how mortgage advisers get paid, address a few common industry criticisms, and explain why having an objective expert in your corner is the smartest financial move you can make.
Who actually pays the mortgage adviser?
Under standard residential lending circumstances in New Zealand, you do not pay your mortgage adviser—the bank pays them.
However, not all banks pay advisers the exact same way. Depending on the lender you choose, the bank-funded compensation generally falls into one of three structures:
- Higher Upfront Commission (No Trail): Some banks pay a slightly higher one-off upfront commission (calculated as a percentage of your loan) when the property officially settles and the loan is drawn down, but they provide no ongoing income.
- Smaller Upfront Commission + Trail: Other lenders pay a slightly smaller upfront percentage on settlement, but provide a "trail commission"—a very small ongoing monthly payment for the lifespan of the loan—to compensate the adviser for providing you with continuous long-term support.
- Upfront Commission + Refix Fees: Some lenders pay an upfront fee on settlement and, instead of a monthly trail, pay a flat "refix fee" (typically between $150 and $200) every few years when your adviser steps in to negotiate and roll over your new fixed interest rate.
This variety across the market is exactly why licensed advisers are required by law to provide you with a clear Disclosure Statement, mapping out exactly how they are compensated by the specific bank you choose.
Addressing the Commerce Commission’s concerns
Because the commission model operates entirely behind the scenes, it isn't without its detractors.
In its landmark Personal Banking Market Study, the New Zealand Commerce Commission took a hard look at mortgage advisers. While the Commission concluded that advisers drive essential competition and are a massive benefit to consumers, they did highlight a couple of structural vulnerabilities buyers should watch out for:
- The "Panel Coverage" Blindspot: Not all mortgage brokers hold accreditations with every single bank. If an adviser has a small "panel" (the selection of lenders they work with), they might completely miss a highly competitive interest rate or cashback offer sitting at a bank they don't have a commercial relationship with.
- Credit Policy vs. Price: The Commission noted that because advisers spend so much time navigating complex bank credit policies just to get an application approved, they can sometimes focus less heavily on aggressively pushing banks for discretionary interest rate cuts.
At Home Loan Factory, we actively work to resolve these issues. We maintain wide lender coverage to ensure genuine market competition, we push bank pricing desks hard for discretionary rate discounts, and we cap our clawback recovery fees—disclosing them clearly on day one so there are never any unexpected surprises.
Why banks prefer to pay advisers rather than branch staff
It is easy to assume that banks would prefer to cut out the adviser and deal with you directly in a branch to save the commission. In reality, using a mortgage adviser isn't an "alternative" choice anymore—it is the dominant way New Zealanders secure property finance.
Recent banking industry figures highlight this permanent shift. According to recent interim financial results reported by Interest.co.nz, ANZ reported that 53% of its entire mortgage portfolio was broker-originated, while Westpac noted that a striking 58% of its home loan portfolio came directly through the adviser channel.
Here is exactly why the modern banking system relies on mortgage advisers and is more than happy to pay for the service:
- Zero Fixed Overhead: Operating a nationwide network of bank branches is incredibly expensive. Lenders have to pay for commercial leases, power, and staff salaries regardless of whether those staff actually write any successful loans that month. By contrast, a bank only pays an adviser a commission when a loan successfully settles. It is a purely performance-based model that heavily reduces the bank's fixed operating costs.
- The "Clean File" Translation: Bank credit policies are notoriously complex. When an everyday buyer submits a loan application on their own, they often miss crucial details, leave out documents, or fail to explain irregular income, creating a massive administrative headache for bank underwriters. An adviser acts as a professional translator. We know exactly how to package your financial life into a "clean file" that speaks the bank's exact language, allowing the bank to assess and approve the loan significantly faster.
- Outsourcing the Advice Burden: Under New Zealand's strict financial regulations, lenders face immense scrutiny regarding responsible lending. By utilising licensed mortgage advisers, the banks are effectively outsourcing the heavy regulatory burden of providing personalised financial advice. They trust that the adviser has already done the rigorous work to ensure the loan structure is suitable for the client's specific long-term goals.
In short, mortgage advisers act as a highly efficient, outsourced processing and advisory arm for the major lenders. The bank wins by keeping their costs low and their compliance high, and you win by getting expert representation without an hourly invoice.
The strategic advantage of market-wide coverage
Now that you know how the financial mechanics work, it’s easy to see why utilising an adviser is the smartest strategic move you can make.
If you walk straight into your local bank branch to ask for a mortgage, that bank teller is only allowed to assess you against their single internal credit policy.
If Bank C is currently heavily discounting their 2-year fixed rate, your adviser routes your application there to capture the savings.
You get the power of market-wide competition, and the winning bank covers the cost of your expert representation.
The Home Loan Factory approach
A standard, highly transactional mortgage broker just wants to get a "Yes" from any bank as fast as possible so they can collect an upfront commission and move on to the next file.
At Home Loan Factory, we take a fundamentally different approach. We are looking at your long-term wealth trajectory. We want to know what your property goals look like in five years, how we are going to structure your loan to maximise your cash flow today, and exactly what your eventual exit strategy looks like.
Because we understand the nuance of the market, our commercial success is directly tied to your long-term financial success. We stay in your corner year after year, monitoring the market, negotiating your refixes, and ensuring your mortgage structure continues to work for you as your life evolves.
Total transparency, objective advice, and absolute dedication to your long-term wealth. That is how the industry should work.
Book a Free Strategy Session with a Home Loan Factory Adviser Today
