Mortgage Broker vs Bank — Which Should You Use? (2026)
When you’re looking for a home loan in Australia, you have two main paths: go directly to a bank (or other lender), or use a mortgage broker to search the market on your behalf. Both can lead to a good outcome — but each has distinct advantages depending on your situation.
Around two-thirds of new Australian home loans are arranged through mortgage brokers (MFAA, 2025). This suggests most borrowers find the broker model valuable — but it’s not the right choice for everyone.
Mortgage Broker vs Bank — Quick Comparison
| Mortgage Broker | Bank (Direct) | |
|---|---|---|
| Products available | 20–50+ lenders | That lender’s range only |
| Cost to you | Usually free (commission paid by lender) | Free |
| Who they represent | Must act in your best interest (legal duty) | Their own institution |
| Rate negotiation | Broker negotiates on your behalf | You negotiate directly |
| Application support | Full support from application to settlement | May vary by lender |
| Suited to | Complex situations, comparison shopping | Simple applications, loyalty deals |
| Time required from you | Less — broker handles paperwork | More — you do the research |
Advantages of Using a Mortgage Broker
1. Access to Multiple Lenders
A broker compares products across their lender panel — which may include the Big Four (CommBank, ANZ, Westpac, NAB), mid-tier banks (ING, Macquarie, Bendigo), and non-bank lenders (Firstmac, Pepper Money, Liberty). You see options you might not find searching on your own.
2. Best Interests Duty
Since April 2021, mortgage brokers in Australia are legally required to act in your best interests — not just recommend a “not unsuitable” loan. They must disclose commissions and cannot prioritise higher-commission lenders without justification. See our best interests duty guide.
3. Application Support
Brokers prepare and lodge the application, manage lender communication, track conditions and chase approvals. For first home buyers or anyone who finds the process daunting, this support is valuable.
4. Credit Strategy
An experienced broker can advise on the order to apply, how to present your income, and how to avoid credit enquiries that could affect your score. They can identify lenders more likely to approve your specific scenario.
5. Complex Situations
If you are self-employed, have irregular income, are a non-resident, own multiple properties, or have a complicated financial situation, a specialist broker who understands your scenario is often far more effective than approaching lenders directly.
Advantages of Going Direct to a Bank
1. Existing Relationship
If you have a long-standing relationship with a bank, they may be willing to offer a competitive rate or fast-track your application. Some banks also offer loyalty discounts or fee waivers for existing customers.
2. Simple Applications
If you have a straightforward situation — PAYG income, 20%+ deposit, good credit history, buying a standard residential property — the application process at a major bank is well-structured and may not require professional assistance.
3. Direct Rate Negotiation
Some borrowers prefer negotiating directly with their bank’s home loan specialist. If you are confident in your market knowledge and know what rate to ask for, you can sometimes match or beat what a broker achieves.
4. Exclusive Products
Some lenders offer special products or rates exclusively through their direct channels. These do not appear on broker panels.
When a Broker Is Likely the Better Choice
- You want to compare multiple lenders without spending weeks doing research
- Your financial situation is complex (self-employed, multiple income streams, past credit issues)
- You are a first home buyer and want guidance through the process
- You want someone to manage the application and lender communication for you
- You are refinancing and want to ensure you are on a competitive rate
- You need access to non-bank lenders or specialist products (low-doc, SMSF, guarantor)
When Going Direct May Make Sense
- You have a simple, strong application and existing relationship with a lender
- You have already researched the market and identified your preferred product
- You are comfortable with the application process and want full control
- You are refinancing with your existing lender (retention pricing is sometimes available without a broker)
- You know a specific lender offers a rate or product you want
The Commission Question
A common concern is whether brokers recommend lenders based on commission rather than merit. Under the best interests duty introduced in April 2021, brokers must put your interests first. They must:
- Disclose all commissions upfront in writing
- Not recommend a product that pays higher commission if a better-suited option exists
- Document their reasoning for the recommendation
Upfront commissions typically range from 0.5%–0.65% of the loan amount. On a $700,000 loan, this is $3,500–$4,550 paid by the lender to the broker. Trail commission of 0.15–0.25% per year is also paid on the outstanding balance.
These commissions are funded by lenders and do not directly increase your interest rate.
Can You Use Both?
Yes. Many borrowers use a broker to research the market and understand what is available — and then approach their own bank to ask if they can match the best offer. This leverages broker research while maintaining a direct banking relationship. There is no obligation to proceed through the broker if you ultimately go direct.
Frequently Asked Questions
Will my application be assessed differently through a broker?
The credit assessment criteria are the same — the lender applies the same policies regardless of how the application arrives. However, a broker may present your application more effectively by matching it to lenders likely to approve your scenario.
Does using a broker cost me more in fees?
Generally no. Brokers receive commission from the lender, not from you. Application fees and loan costs are the same whether you apply through a broker or directly. Some lenders may offer a slightly lower rate for direct applications — but this is not universal.
What if my broker recommends a loan that turns out to be poor value?
You can complain to AFCA (Australian Financial Complaints Authority) if you believe your broker failed to act in your best interests. AFCA can order remedies including compensation.
Related Guides
- How Mortgage Brokers Work
- How Are Mortgage Brokers Paid?
- Mortgage Broker Best Interests Duty
- Find a Good Mortgage Broker
- Mortgage Brokers Hub
This article provides general information to help Australian borrowers understand their options. It is not personal financial or credit advice. Your choice of broker or direct lender should be based on your specific circumstances. Find a licensed mortgage broker through MoneySmart.