Trail commission is what separates mortgage broking from almost every other sales career — the ability to build a passive income stream that pays every month, indefinitely, from work already done. Understanding exactly how it works is essential for anyone considering a career in broking, and for any broker who wants to build a sustainable, scalable business.
Trail commission — also called trail income or ongoing commission — is a monthly payment made by a lender to the broker for the life of a loan. As long as the loan remains active and the client stays with that lender, the broker receives a monthly payment calculated as a percentage of the outstanding loan balance.
Trail is paid in addition to the upfront commission received at settlement. It is the compounding engine of a broker's income — each new loan adds to the trail book, and the trail book generates income every month without additional work.
Australian residential lenders typically pay trail at 0.15% to 0.175% per annum of the outstanding loan balance. This varies by lender — some pay higher trail on certain products, others pay lower or no trail on introductory rate loans.
A broker settles a $700,000 home loan. The lender pays trail at 0.175% per annum.
Year 1 monthly trail: $700,000 × 0.175% ÷ 12 = $102/month
That is $102/month from one loan. Now consider a broker who has settled 100 loans averaging $600,000 each over three years — a $60M trail book:
Monthly trail on $60M book at 0.175%: $60,000,000 × 0.00175 ÷ 12 = $8,750/month
Before aggregator split. After the typical 15–20% aggregator retention, the broker nets approximately $7,000–$7,400/month from trail alone — while actively writing new loans on top.
Trail income declines gradually over time as the loan balance reduces through principal and interest repayments. A $700,000 loan settled today will have a lower outstanding balance in five years — and therefore generate slightly less trail. This is why consistently settling new loans is important to maintain and grow trail income.
Brokers operating as Credit Representatives under an aggregator's ACL share their commission with the aggregator. Typical aggregator payout rates are 80–85% of upfront and trail — meaning the aggregator retains 15–20%.
Brokers with their own ACL receive 100% of commission but carry their own compliance costs, insurance, and software fees — which often means the net outcome is similar to operating under an aggregator at reasonable settlement volumes.
Clawback is when a lender recoups upfront commission from the broker if a loan is discharged (paid out or refinanced away) within a set period after settlement. Standard clawback periods in Australia are:
Clawback does not affect trail — trail simply stops when the loan discharges. The clawback is applied only to the upfront commission. The lender deducts the clawback amount from the broker's future commission payments via the aggregator.
For new brokers, clawback is one of the biggest financial risks in Year 1 — a loan that discharges six months after settlement can wipe out the entire upfront commission. This is why building strong client relationships and proactively managing discharges is a core business skill, not just a nice-to-have.
Trail income is the most valuable asset a broker builds over their career — and it requires active management to protect. The strategies that separate brokers who maintain their trail from those who watch it erode:
Contact every client annually to review their rate, ensure their loan still meets their needs, and proactively reprice if a better rate is available with the same lender. A client who hears from their broker every year does not need to go looking for a new broker.
Most lenders offer retention rates for existing customers that are better than the advertised rate but worse than what a new customer gets. Proactively requesting repricing for clients keeps them with their current lender — protecting your trail — while demonstrating value.
When a client mentions they are considering refinancing, the first conversation is always: can the current lender match what is available elsewhere? If yes, a rate match saves the clawback and protects the trail. If no, the broker refinances the client themselves — losing the trail on the old loan but earning upfront on the new one and resetting the trail clock.
The Commercial Finance Masterclass covers upfront commission, trail income, clawback, aggregator splits, the trail book lifecycle, and how to build a sustainable broker business — 43 modules, $97 one-time access.
Get Instant Access — $97 →The Commercial Finance Masterclass is an independent educational resource and is not affiliated with any RTO, ASIC-licensed entity, MFAA, FBAA, or any other regulatory body. Content is for general educational purposes only and does not constitute financial, legal, credit, or investment advice.