If you’re weighing up whether to use a mortgage broker or walk into a bank yourself, you’re not alone. The short answer is that there’s no single right choice – it depends on your situation, how much research you’re willing to do, and what kind of loan features matter to you. Let’s walk through what each path looks like in Australia, so you can make the call that feels right.
What a mortgage broker actually does
A mortgage broker acts as a go-between who deals with banks and other lenders to arrange a home loan. Under Australian law, mortgage brokers must act in your best interests when suggesting a loan.
A good broker will:
- Understand your needs and goals.
- Work out what you can afford to borrow.
- Find loan options that suit your situation.
- Explain how each loan works and what it costs.
- Apply for a loan and manage the process through to settlement.
In practice, this means you sit down once, explain what you’re after, and the broker does the legwork of comparing loans from the panel of lenders they deal with.
How brokers are paid – and what it means for you
Lenders generally pay mortgage brokers a commission for distributing their products, so most borrowers don’t pay the broker directly. The commission is typically a percentage of the loan amount and has both an upfront and ongoing component.
Sometimes a broker may charge you a fee. If they do, they must clearly communicate this and give you a written quote before providing services. You need to sign that quote before they can ask for payment.
Because brokers receive commissions from lenders, it’s worth asking directly how they get paid and whether that differs between lenders. A transparent broker will walk you through this.
Broker versus bank: how to think about the trade-offs
When a broker may add value
- You want someone to do the heavy lifting of comparing loans from multiple lenders.
- You’re not confident navigating loan features, comparison rates, and fine print.
- Your situation is a little outside the standard – self-employed, new to Australia, small deposit.
- You value having one person manage the paperwork and chase the lender on your behalf.
When going direct may work well
- You already have a strong relationship with your bank and they’ve offered you a competitive package.
- You’re comfortable researching and comparing loans yourself.
- You prefer a simple, no-frills loan and know exactly what features you want (or don’t want).
- You’re worried a broker’s panel might not include the lender you have in mind.
Keep in mind that even if you start with a broker, you can still approach your own bank directly. The key is to compare what each offers based on your actual needs.
Making your broker meeting count
If you decide to test the broker path, go into the meeting prepared. Think about your must-haves (the features you can’t do without) and your nice-to-haves. Bring that list, and ask specific questions:
- Do you offer loans from a range of lenders? What sort of lenders do you work with, and which can’t you access?
- How do you get paid for the advice you’re giving me? Does this differ between lenders?
- Why did you recommend this particular loan? Why is it in my best interests?
- What fees will I have to pay when taking out this loan?
- Can you show me a couple more options, including one with the lowest cost?
You don’t have to take the first loan you’re offered. If nothing feels right, ask the broker to find alternatives.
What the law requires
All mortgage brokers must hold an Australian credit licence or be a credit representative. Before you meet a broker, check ASIC’s Professional Registers to confirm they’re authorised. If they aren’t on the list, they’re operating illegally.
If something goes wrong, you can complain to the broker’s business in writing. If it still isn’t resolved, the Australian Financial Complaints Authority provides free, independent dispute resolution.
Which road should you take?
Start by asking yourself two things: how much time and confidence do you have to compare lenders yourself, and how complex is your situation? If you’re comfortable researching and your loan needs are straightforward, going direct can save you the broker step. If you’d rather have a professional navigate the hundreds of loan options and explain features in plain English, a broker can be well worth it.
Whichever path you choose, the same principle applies: compare at least two lenders, check the comparison rate (not just the headline interest rate), and don’t pay for features you won’t use.
OZ Home Loan provides general Australian home loan information for multilingual borrowers. This article is not personal financial advice, and we don’t promise approval, rates, or savings. A mortgage broker or lender can help you explore options tailored to your circumstances.