When it comes to getting a home loan in Australia, you have two main paths: go directly to a bank, or use a mortgage broker who compares products across multiple lenders on your behalf. Both approaches can deliver a good outcome, but they work quite differently. This guide offers an honest comparison to help you decide which is right for you.
What Does a Mortgage Broker Do?
A mortgage broker acts as an intermediary between you and multiple lenders. Rather than offering one institution's products, a broker compares options from a panel of lenders — typically 20 to 60 or more — to find a loan that suits your circumstances. The broker manages the application process, liaising with the lender on your behalf from initial enquiry through to settlement.
Since January 2021, brokers in Australia are legally required to act in the best interests of borrowers under the Best Interests Duty. This means the broker must prioritise your interests over their own, including recommending a product even if it pays a lower commission.
What Happens When You Go Directly to a Bank?
When you approach a bank directly, a bank lending specialist (or mobile lender) will present the products available within that institution. They cannot recommend products from competing lenders. The bank specialist's role is to help you choose the most suitable product from their own range and process your application.
Bank lending specialists are not subject to the Best Interests Duty that applies to brokers. Their obligation is to ensure the product is "not unsuitable" for you, which is a lower threshold than the broker's requirement to act in your best interests.
Side-by-Side Comparison
| Factor | Mortgage Broker | Bank Direct |
|---|---|---|
| Product range | 20 to 60+ lenders | One institution's products |
| Cost to you | Usually no fee (commission from lender) | No fee |
| Duty | Best Interests Duty (legally binding) | "Not unsuitable" obligation |
| Rate negotiation | Compares rates across panel | May offer discretionary discounts |
| Availability | Often evenings and weekends | Typically business hours (branch) |
| Ongoing support | Annual rate reviews common | Varies by institution |
| Application process | Broker manages end-to-end | You manage with bank support |
When a Broker Makes Sense
- You want to compare options. If you do not have time to visit multiple banks and compare products yourself, a broker does this for you across a wide panel.
- Your situation is complex. Self-employed borrowers, borrowers with non-standard income, or those purchasing investment properties often benefit from a broker's ability to match them with the right lender's credit policy.
- You are a first home buyer. Navigating grants, schemes, and lender requirements for the first time is significantly easier with a broker's guidance. Read our first home buyer guide.
- You are refinancing. A broker can quickly assess whether switching lenders will save you money after accounting for all costs. Learn about when to refinance.
- You value convenience. Brokers often offer evening and weekend appointments, phone and video consultations, and digital document signing. At Manage Your Loans, all loan documents are signed securely via SignAndGo, so you can complete the process without visiting a branch.
When Going Direct Makes Sense
- You have a strong existing relationship. If you have been with your bank for years and they are offering a competitive rate, going direct may be simpler. However, it is still worth having a broker benchmark the offer against the wider market.
- You want a specific product. If you have already researched and identified the exact product you want, and it is only available directly from the lender, going direct is the logical choice.
- You prefer face-to-face in-branch service. Some borrowers prefer the familiarity of walking into their local branch.
The Cost Question: Who Pays the Broker?
Brokers are paid by the lender, not by you. The lender pays the broker an upfront commission (typically 0.5% to 0.7% of the loan amount) and a smaller ongoing trail commission (typically 0.15% to 0.2% per annum). This commission is built into the loan product, meaning you pay the same rate whether you go through a broker or apply directly with that lender.
Under the Best Interests Duty, brokers must disclose their commission structure to you and must not let commission influence their recommendation. If you have any questions about how your broker is compensated, ask them directly — a good broker will be transparent.
Market Trends: Broker Usage in Australia
According to industry data, mortgage brokers now facilitate close to 70% of all new residential home loans in Australia. This share has grown steadily over the past decade, reflecting borrower preference for the comparison, convenience, and advocacy that brokers provide.
If you would like to experience the broker process firsthand, book a free consultation with our team. We will compare your current loan (or your goals for a new loan) against the products available across our panel of over 40 lenders — at no cost and with no obligation.