When the time comes to get a home loan, you have two main paths: go directly to your bank (or a lender), or work with a mortgage broker. Both can get you a home loan. But the outcomes — in terms of rate, features, and service — can differ significantly.
Here’s an honest comparison of both options to help you decide which makes sense for your situation.
What Does a Mortgage Broker Actually Do?
A mortgage broker is a licensed professional who acts as an intermediary between you and lenders. Instead of selling their own product, they assess your financial situation and search across a panel of lenders to find a loan that suits your goals.
In Australia, brokers must hold an Australian Credit Licence (or be authorised under one) and are legally required to act in your best interests under ASIC’s Best Interests Duty, introduced in 2021.
| 💡 A broker’s job is to serve you — not the bank. They’re legally required to recommend what’s best for you, not what earns them the highest commission. |
|---|
How Brokers Are Paid
This is one of the most common questions — and misconceptions — about mortgage brokers in Australia.
Brokers are paid by the lender you choose, not by you directly. There are two components:
Upfront commission — paid when your loan settles, typically 0.5%–0.65% of the loan amount
Trail commission — paid ongoing, typically 0.1%–0.2% per year on the remaining loan balance
Brokers are required to disclose all commissions to you upfront in their Credit Proposal document. You have the right to ask exactly what commission a broker will receive for any recommendation.
Broker vs Bank: Side-by-Side Comparison
| Mortgage Broker | Direct to Bank | |
|---|---|---|
| Lender choice | 20–60+ lenders | That bank only |
| Cost to you | Free (paid by lender) | Free |
| Paperwork handling | Broker manages all of it | You manage it |
| Rate access | Negotiated across panel | Their standard rates |
| Time required | One appointment | Multiple applications |
| Advice obligation | Best interests duty applies | No obligation to compare |
| Product range | Wide — across many lenders | Limited to their own range |
When Going Directly to a Bank Makes Sense
There are scenarios where going directly to a lender works well:
You have an existing relationship with your bank and they’ve offered you a demonstrably competitive rate
Your situation is very straightforward (strong income, 20%+ deposit, standard employed) and you’ve done your market research
You want to consolidate all your banking with one institution for simplicity
Even in these cases, getting a broker to check the market first takes just a few days — and the comparison may reveal meaningful savings.
When Using a Broker Is Clearly Better
A broker adds disproportionate value in these situations:
You’re self-employed or have complex income
You’ve had credit issues in the past
You’re buying an investment property and need loan structuring advice
You want to compare a wide range of lenders efficiently without multiple credit applications
You’re a first home buyer navigating grants, schemes and unfamiliar processes
You’re time-poor and want someone to handle the process end-to-end
The ASIC Best Interests Duty: What It Means for You
Since 2021, Australian mortgage brokers have been required to act in the best interests of their clients — not simply recommend an ‘appropriate’ loan or favour lenders who pay higher commissions.
This means your broker must:
Prioritise your interests when making a recommendation
Avoid recommending a product that generates a higher commission at the expense of a better outcome for you
Disclose any conflicts of interest
Keep records of their reasoning — which regulators can review
This legislative change significantly raised the bar for broker conduct and gives consumers meaningful protection.
How to Choose a Good Mortgage Broker
Not all brokers are equal. When selecting a broker, look for:
A large lender panel — at least 20+ lenders gives meaningful choice
Experience with situations like yours — first home buyer, investor, self-employed
Willingness to explain their recommendation — including why they chose one lender over others
Clear communication and responsiveness — you’ll be in regular contact through the process
ASIC registration — verify on ASIC’s credit licence register
At My Fund Finder, we hold ACL 124584, access 40+ lenders, and are committed to finding the right loan for your situation. You can connect with us at myfundfinder.com.au/find-a-broker.
Frequently Asked Questions
Yes — in the vast majority of cases, there is no cost to you. The lender pays the broker’s commission. Some brokers charge a fee in complex situations (such as SMSF lending); this must be disclosed upfront.
Often yes — because brokers can access lenders’ broker-exclusive rates, which are frequently lower than advertised rates. They can also negotiate on your behalf across a wide panel.
No — experienced brokers typically speed up the process because they know which lender’s policies suit your profile, reducing the risk of rejection and back-and-forth with lenders.
You are not obligated to proceed with any recommendation. Ask your broker to explain their reasoning and, if unsatisfied, you can seek a second opinion from another broker or go directly to a lender.
Yes — including first home buyer loans, refinances, investment loans, construction loans, bridging finance, and specialist or low-doc lending for self-employed borrowers.
General Information Disclaimer: This article is general in nature and does not constitute financial or credit advice. Please speak to a licensed mortgage broker before making any lending decisions.
Leave a Reply