This is the question most borrowers ask at the start: do I go to my bank, or do I use a broker? It sounds simple, but the answer affects which lenders you see, what rates you are offered, who is legally obligated to act in your interest, and how much of the market you actually compare.
The short version: a mortgage broker works across multiple lenders and must recommend what suits you. A bank lender works for one bank and sells that bank's products. Both can get you a home loan. The difference is in the scope of comparison and the legal obligations behind the recommendation.
If you already know you want a broker to compare options for your situation, you can submit an enquiry or call 1300 421 044. Otherwise, here is the full breakdown.
How mortgage brokers and banks compare
The core difference is structural. A broker sits between you and the market. A bank lender sits inside one institution. That single distinction drives nearly every other difference in the experience.
| Factor | Mortgage broker | Bank (direct) |
|---|---|---|
| Lender access | 20 to 50+ lenders including major banks, non-banks and specialists | That bank's own products only |
| Legal obligation | Best Interests Duty (ASIC-regulated, since January 2021) | General consumer protection laws apply, but no equivalent duty to recommend the best product for you |
| Cost to borrower | Usually no direct fee. Lender pays commission | No direct broker fee, but you may pay the same or higher lender fees |
| Rate comparison | Compares rates across multiple lenders in real time | Offers only that bank's current rates |
| Specialist situations | Can match complex borrowers (self-employed, low doc, bad credit) to suitable lenders | If the bank declines you, you start again elsewhere |
| Negotiation | Can negotiate across lenders and leverage volume relationships | May offer retention discounts if you threaten to leave |
| Ongoing support | Trail commission incentivises ongoing review and support | Ongoing relationship depends on branch access and service levels |
| Application process | Broker handles paperwork, submission and follow-up with the lender | You deal directly with the bank's application process |
Benefits of using a mortgage broker
There is a reason brokers now handle over three quarters of all new home loans in Australia. The value is not just in finding a rate. It is in the comparison, the structuring, and the time savings across the entire process.
A broker compares products from 20 to 50+ lenders in a single process. That includes major banks, regional banks, credit unions, non-bank lenders and specialist financiers you may never have heard of. Some of those lenders do not even accept direct applications from the public.
A bank lender has one product set. A broker shows you what is available across the market and lets you compare features, rates, fees and approval likelihood side by side. That comparison alone can save thousands over the life of a loan.
Most brokers charge you nothing directly. The lender pays the broker a commission after your loan settles. The commission structure is disclosed upfront, and the Best Interests Duty prevents commissions from influencing the recommendation.
If you are self-employed, have variable income, a less-than-perfect credit history, or need a low doc loan, a broker knows which lenders are likely to approve your application. Without that knowledge, you risk multiple declines that hurt your credit file.
The broker prepares your application, submits it to the lender, chases assessors, manages conditions and keeps you updated. That is hours of work you do not have to do yourself.
Because brokers earn a trailing commission, they have an incentive to check your loan stays competitive. A good broker will proactively review your rate and let you know if a better option appears.
In practice, the biggest benefit is the one borrowers feel most: you tell one person your situation, and they match you to the right lender. Without a broker, you are repeating the same conversation at every bank, hoping one says yes, and you have no way of knowing whether the rate you are offered is actually competitive.
When going direct to a bank makes sense
A broker suits most situations, but there are genuine scenarios where going directly to your bank can work well.
If your salary, savings and other products are with one bank, they may offer you a discounted rate or package pricing that reflects the total relationship value. Ask them to put their best offer in writing, then compare it.
Some banks offer products that are not available through the broker channel. Offset account features, specific package deals, or staff rate discounts may only be accessible by applying directly.
If you are a PAYG employee with clean credit, a 20% deposit and a simple purchase, most lenders will compete for your business. In that scenario, the bank you already use may match the market without you needing a full broker comparison.
Some borrowers prefer walking into a branch and dealing with the same person throughout. Many brokers also offer face-to-face service, but if branch presence matters to you, a bank with a local office may feel more familiar.
Even if you lean toward a bank, it is worth getting a broker comparison first. A broker can tell you within a few minutes whether your bank's offer is competitive, and you are not locked in just because you ask.
How mortgage brokers get paid in Australia
This is the question behind the question. People wonder: if the broker is free, how do they make money? And does that affect what they recommend?
Brokers earn two types of commission from the lender, not from you.
Upfront commission
- Paid by the lender after your loan settles
- Typically 0.65% to 0.70% of the loan amount
- On a $600,000 loan, that is roughly $3,900 to $4,200
- Subject to clawback if the loan is discharged within 12 to 24 months
Trailing commission
- Paid monthly for the life of the loan
- Typically 0.15% to 0.20% per year of the remaining balance
- Incentivises the broker to keep your loan competitive
- Ends if you refinance or discharge the loan
A small number of brokers charge a direct fee for specialist or complex work. This must be disclosed in writing before you commit. For standard residential lending, you should not expect to pay a broker fee.
Commission rates are broadly similar across lenders, so a broker does not earn significantly more by steering you to one lender over another. The Best Interests Duty adds a legal layer of protection on top of that.
Best Interests Duty: what it means for you
Since January 2021, mortgage brokers in Australia have operated under the Best Interests Duty, a legal obligation introduced by ASIC following the Banking Royal Commission. It requires brokers to recommend the product that is in your best interests, not simply the one that is easiest to place or pays the highest commission.
In practice, this means your broker must assess your situation, compare suitable products, and document why they recommended a particular lender and loan structure. If a broker recommends a product that is clearly not in your interest, they face regulatory consequences.
ASIC is currently conducting its first targeted review of how brokers are complying with the Best Interests Duty, assessing documentation, monitoring and complaint handling across the industry. That review, which began in mid-2025, is a positive signal that the obligation is being actively enforced.
For more detail, see ASIC's Regulatory Guide 273 on the Best Interests Duty.
Common mistakes when choosing between a broker and a bank
Most borrowers do not make a bad decision here. They make a lazy one. They default to their bank because it is familiar, or they choose a broker without checking credentials. Both can cost money.
Your bank's advertised rate is rarely the best rate available. Banks publish standard variable rates, but the rates borrowers actually pay depend on negotiation, loan size, LVR and product choice. Without comparing, you do not know where you stand.
Get a broker comparison before accepting any bank offer. It takes minutes and costs nothing.
Each full application you submit generates a credit enquiry. Multiple enquiries in a short period can signal financial stress to lenders and reduce your credit score. A broker submits one application to the right lender, not five to see what sticks.
Let a broker assess your situation first. They can tell you which lenders are likely to approve you before you apply.
Not all brokers are equal. Some have narrow lender panels, limited experience with complex situations, or high staff turnover. A good broker should hold an Australian Credit Licence or be an authorised credit representative, and should be transparent about their panel size and specialisation.
Ask your broker how many lenders they access, what situations they specialise in, and how they will document your best interests.
The opposite is true. Brokers add the most value when your situation is not straightforward. Self-employed borrowers, investors with multiple properties, buyers with credit issues, and people using SMSF structures all benefit from a broker who knows which lenders will say yes.
The more complex your situation, the more a broker can help you avoid declined applications.
Which option is right for your situation?
There is no universal answer, but there is a useful filter. Ask yourself two questions: do I know exactly which lender and product I want? And am I confident the rate I have been offered is competitive?
If the answer to both is yes, a bank may work fine. If either answer is no, or if your situation has any complexity at all, a broker will almost certainly save you time and likely save you money.
Use a broker if you are:
Consider going direct to a bank if you:
One approach that works well: get a broker comparison first, then ask your bank to match or beat it. If they can, great. If they cannot, you already have a better option ready to go.
