Good questions — I think it’s worth unpacking a few things around mentoring in mortgage broking so you can better assess what’s fair.

First up: mentoring is required for new brokers. The Mortgage & Finance Association of Australia (MFAA) states that brokers with less than two years’ experience must have a mentor. The mentor’s role includes real-world coaching, compliance support and deal submission review — not just ticking boxes.

Given that, the compensation for a mentor should reflect more than just “checking paperwork”. It should account for:

Business development & client strategy support
Compliance & lodgement oversight
Deal structuring & loan packaging guidance
Time spent answering questions, reviewing files, mentoring conversations
In the example you calculated (20% of upfront commission = $600 per loan, 4 loans/month = $2,400 to mentor, 5 students = $12,000/month), that could be reasonable — if all those conditions are met: the student is writing 4 loans monthly, the mentor is actively engaged beyond paperwork, and the arrangement is clearly defined.
However, if the student is writing far fewer loans (for example, as one industry speaker says: “4 per year” might be more realistic starting out), then the mentor’s cut may seem disproportionate.

A few quick checks you should ask:

What exactly is the mentor doing? (Just paper-check or full coaching?)
How many mentees does the mentor take on? (Quality vs quantity is important)
How long does the mentoring period run? (e.g., first 12-24 months)
What happens after the mentoring period? Does the split change?
The split or fee should reflect realistic production levels (are 4 loans/month realistic for you right now?)

In short: 20%+ of commission can be fair if the mentor is delivering substantial value and the mentee is producing enough volume. But if the workload, support or volumes are low, then you might question whether the split aligns with the value you receive.