Glossary
The words on your commission statement, explained.
Short definitions with a worked example each, written for Australian brokers. Every term links to the calculator or guide that puts it to work.
Aggregator split
The share of commission an aggregator keeps in exchange for lender accreditation, compliance, software and payment processing; the remainder is the broker's net commission.
Read definition →Arrears
A loan on which the client has missed one or more scheduled repayments. Most lenders suspend trail while a loan is in arrears and resume it once the account is brought up to date.
Read definition →Best interests duty
The statutory duty, in force since 1 January 2021, requiring mortgage brokers to act in the best interests of the consumer when providing credit assistance, and to prioritise the consumer's interests over their own where they conflict.
Read definition →Book valuation
An estimate of what a broker's trail book would sell for, most often a multiple of annualised trail adjusted for run-off, seasoning, arrears and clawback exposure.
Read definition →Clawback
The recovery of some or all of an upfront commission by a lender when a loan is refinanced, sold or repaid within a set period after settlement, usually up to 24 months.
Read definition →Discharge
The closing of a loan account, whether by refinance to another lender, sale of the property or full repayment. Trail stops immediately and, if it happens inside the clawback window, upfront is recovered.
Read definition →Fixed-rate expiry
The date a client's fixed interest period ends and the loan reverts to the lender's variable rate, which is the single most predictable moment a client shops around.
Read definition →Interest-only conversion
The end of an interest-only period, when a loan switches to principal-and-interest repayments over the remaining term and the client's monthly payment rises sharply.
Read definition →Net trail
Trail commission after the aggregator's share has been deducted: the amount that actually reaches the broker, and the figure buyers multiply when valuing a book.
Read definition →RCTI
Recipient created tax invoice: the GST document your aggregator issues on your behalf each commission run, listing every upfront, trail, clawback and fee line for the period.
Read definition →Repricing
Negotiating a lower interest rate on a client's existing loan with the same lender, without a refinance, so the client stays, trail continues and no clawback is triggered.
Read definition →Run-off
The rate at which loans leave a broker's book each year through refinance, sale or repayment, taking their trail commission with them.
Read definition →Trail book multiple
The number a buyer multiplies annualised trail income by to arrive at a purchase price for a trail book; recent Australian sales cluster between 2.5× and 3.5×.
Read definition →Trail commission
An ongoing monthly payment from a lender to the broker who wrote a loan, calculated as an annual percentage of the outstanding balance for as long as the loan stays with that lender.
Read definition →Upfront commission
The one-off payment a lender makes when a loan settles, calculated as a percentage of the settled amount and subject to clawback if the loan leaves early.
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