If you’re about to borrow for a home, you’ll come across the question fast: go straight to a bank, or use a mortgage broker? A mortgage broker is a licensed go-between who compares home loans across a panel of lenders, works out how much you can borrow, and manages your application through to settlement — instead of only being able to offer you one bank’s products. Here’s what that actually looks like in practice, and how to tell a good broker from a bad one.
What does a mortgage broker actually do?
A mortgage broker assesses your financial position, compares loan options across their lender panel, and handles the paperwork and lender communication from application through to settlement. In Australia, brokers are legally required to act in your best interests when recommending a loan, not the lender’s.
Day to day, that means working out your borrowing power, explaining what each loan actually costs once fees and features are included, and chasing the lender if your application stalls. It’s also why brokers now arrange the majority of new home loans in the country — 76% of Australians arranging a home loan now go through a broker, according to the Mortgage & Finance Association of Australia (MFAA).
Mortgage broker vs bank: what’s actually different?
Going direct to a bank means you only see that bank’s own products, priced at whatever rate they’ve published for your situation. A broker compares a panel of lenders and can often get a better deal, because lenders will let a broker submit a client’s profile for special or discretionary pricing based on how strong the application is — a rate that isn’t sitting on the public rate card.
That’s something we see play out often: two borrowers with near-identical loans can land on different rates purely because one application was packaged and pitched to the lender’s credit team in a way that highlighted its strengths, and the other was a standard direct application. A bank’s own staff can only offer you what’s on the shelf; a broker can make the case for something better.
How do mortgage brokers get paid?
Mortgage brokers are paid a commission by the lender once your loan settles, not by you. Most brokers receive an upfront commission plus an ongoing “trail” commission for the life of the loan, both calculated as a percentage of your loan balance.
| Commission type | Who pays it | How it works |
|---|---|---|
| Upfront commission | The lender | Paid once, on settlement, based on the amount you’ve drawn down |
| Trail commission | The lender | Paid ongoing, for as long as the loan runs |
| Clawback | The broker repays it | Lenders reclaim some or all of the upfront commission if you discharge the loan within 18 months to two years of settlement |
Your interest rate and fees are the same whether the lender pays a broker or not — the commission comes out of the lender’s own cost of doing business, not out of your loan.
Are mortgage brokers free, and what fees might apply?
For the vast majority of home loans, using a mortgage broker costs you nothing directly. Brokers must tell you upfront and explain the reason if a fee ever applies — usually only for very small, complex, or unusual loans where a lender doesn’t pay commission on that product.
If you’re ever quoted a fee, ask exactly what it covers and why it applies to your loan specifically. A broker who can’t give you a straight answer is a broker worth walking away from.
What’s the downside of using a mortgage broker?
The main downside is that a broker only shows you loans from lenders on their panel, so if your ideal lender doesn’t work with brokers, you won’t see it through them. It’s also worth remembering that different lenders can pay slightly different commissions, which is exactly why the best interests duty exists — to make sure that difference never decides which loan you’re offered.
How do you spot a bad mortgage broker?
A bad broker is task-based: they submit your application, then go quiet until settlement, without explaining why they’ve recommended a particular loan. Red flags include being vague about how they’re paid, pushing you toward a single lender without comparison, or being unreachable once the paperwork is in.
A good broker does the opposite — explains the reasoning behind every recommendation, discloses their commission without being asked, and stays available well after settlement, not just until the loan lands.
What shouldn’t you hide from your mortgage broker?
Nothing. A broker can only get you the best-fitting loan if they have the full picture — your real income, your existing debts, any credit issues, and what you’re actually planning to do with the property. Leaving something out doesn’t protect you; it just means the lender is more likely to uncover it during assessment and knock the application back.
Is a mortgage broker worth it?
For most borrowers, yes — you get a wider comparison, someone managing the paperwork, and often sharper pricing than you’d be offered walking into a branch, at no direct cost to you. The exception is if you already know exactly which single lender you want and don’t need help comparing anything else.
We’re an Australian mortgage broking business built on straightforward advice, competitive rates, and putting your loan first, and a conversation with us costs nothing. Get in touch or call 02 8708 7240 if you’d like us to run your situation past our panel of 40+ lenders.