A difference in mortgage rates can save you thousands of dollars in interest over the life of your mortgage. This makes mortgage brokers worth having during the loan process to source and arrange your finance. It means you don’t have to do all the confusing work.

But what is the commitment fee? And why should you pay it?
Let us tell you all about commitment fees, if they are rebatable and why you should pay them to your mortgage broker.


A commitment fee is a cost charged by a broker to a borrower for the commitment they’ve made to lending. The borrower pays the fee in return for the reassurance that the loan will be supplied at the specified date and the contracted interest rate.

This commitment from the client demonstrates respect for the broker’s time to research the right loan for the client’s needs and compensates a broker for working on a client’s case that may never develop into a settlement.


Imagine you’re a bricklayer who has been contracted to build a brick fence. Once your services have been accepted you will require a deposit for the job. This locks you in and covers your behind the scenes work, resources, and materials needed to begin. You’re not going to do all of this out of pocket and wait until the end of the job to receive full payment. The client could easily back out last minute and you’re left with nothing but excess materials, less money and plenty of frustration.


By paying the fee you can be guaranteed good results if you decide to go ahead and if you decide not to then there is no harm done. Your relationship with your broker is one of mutual respect and said broker will be happy to take you on again if you decide to apply for a loan in the future.

Good news! If you decide to go ahead with your application, the commitment fee is rebatable. You’ll get the money back from the fee once the loan settles.

Brokers see a commitment fee as a sign from the borrower that they are sincere about borrowing money. It also shows the broker that their client is confident they satisfy all of the funding conditions. Furthermore, by paying the commitment fee, the client shows that they value and respect their brokers’ time. A copious amount of work goes into the research and compliance for a client, genuine clients should be open to paying this fee in return for experienced, high-quality work. 

If you’d like to know more about commitment fees or have any questions about home loans, you can get in contact with us here.