Also called: Trail, Ongoing commission
Trail commission
Trail commission is an ongoing payment a lender makes to a broker over the life of a facility, usually calculated on the outstanding balance. It is more common in mortgage and some commercial lending than in short-term asset finance, where an upfront commission is typical.
What is a trail commission?
Trail commission is an ongoing payment a lender makes to a broker over the life of a facility, usually calculated on the outstanding balance. It is more common in mortgage and some commercial lending than in short-term asset finance, where an upfront commission is typical.
Example
A commercial property loan might pay an upfront commission at settlement plus a small annual trail while the balance remains outstanding.
Why it matters
Understanding how your broker is paid, upfront and ongoing, is part of judging whether a recommendation is in your interests.