Do You Need a Mortgage Broker? Or Can You Go Direct to the Bank?

More than 70% of Australians now use a mortgage broker when taking out a home loan — up from around 40% a decade ago. But what does a broker actually do, who pays them, and is going direct to the bank ever the better option?

Here's the honest answer — including when a broker isn't necessary.

What a mortgage broker actually does

A licensed mortgage broker sits between you and the lender. Their job is to:

• Understand your financial situation — income, expenses, debts, deposit, goals
• Search across a panel of 30–60+ lenders to find the best fit for your profile
• Know which lenders will approve you (and which will decline you) before you apply
• Prepare and lodge your application with the right documentation
• Manage the process through to settlement — dealing with the lender so you don't have to

The broker doesn't just find you a low rate — they find you a lender whose policies match your situation. A self-employed borrower, someone with a low deposit, or someone with an unusual property all need very different lenders. The broker's job is knowing the difference.

A good broker will also pre-assess your application before lodging it, meaning they'll know in advance whether a lender is likely to approve you. This matters because every credit application leaves a mark on your credit file — a declined application hurts your score. A broker protects you from that.

Who pays the broker?

In Australia, mortgage brokers are paid by the lender — not by you. When your loan settles, the lender pays the broker an upfront commission (typically 0.6–0.7% of the loan amount) and an ongoing trail commission (~0.15% per year while the loan is open).

This means using a broker costs you nothing. You get the same loan, at the same or better rate, with expert guidance — at no charge to you.

Some people worry that brokers will steer them toward loans that pay higher commissions. This concern is largely addressed by law — but it's worth understanding.

How a broker actually saves you money

Beyond finding a lower rate, brokers save money in less obvious ways:

• Avoiding LMI: Some lenders offer LMI waivers for certain professions (doctors, lawyers, accountants). On a $700,000 purchase with 10% deposit, this alone can save $15,000–$25,000.
• Right lender first time: Getting declined by the wrong lender and damaging your credit score can take 12+ months to recover. A broker prevents this.
• Negotiating power: Brokers send volume to lenders and often have access to pricing that retail customers can't access directly.
• Cashback deals: Some lenders offer cashback offers of $2,000–$4,000 exclusively through the broker channel.
• Ongoing rate reviews: A good broker doesn't disappear after settlement — they'll flag when your rate has slipped and when it's time to refinance.

When going direct to the bank makes sense

To be fair, there are situations where going direct is reasonable:

• You already have a strong relationship with a bank and they've pre-approved you at a genuinely competitive rate
• Your situation is very simple — stable PAYG income, 20%+ deposit, clean credit history, standard property
• You have the time and confidence to negotiate directly and compare multiple offers yourself
• You have a professional LMI waiver that only your existing bank offers

Even then, it's worth at least getting a broker to check your bank's offer against the market. You might find your bank is already competitive — or that you're leaving thousands on the table.

When a broker is clearly the better choice

• Self-employed: Income assessment is complex — brokers know which lenders are most generous with self-employed applicants and what documentation to prepare
• Low deposit (under 20%): LMI costs vary dramatically between lenders, and some have LMI waivers for certain professions
• Complex income: Multiple income sources, rental income, casual or contract work, PAYG plus ABN
• Impaired credit: Brokers can find specialist lenders and advise on the best timing to apply
• Unusual property: Small apartments under 50sqm, rural or regional properties, commercial-residential mixed
• First home buyers: The process is unfamiliar — having someone manage it reduces stress and mistakes significantly
• Refinancing: Getting competitive offers from multiple lenders without triggering multiple credit enquiries on your file
• Investment property: Lenders assess investment loans differently — serviceability rules, LVR limits, and negative gearing treatment varies significantly

What to look for in a mortgage broker

Not all brokers are equal. Here's what to check:

• Panel size: More lenders on their panel means more options for you. A minimum of 30 lenders is reasonable; 40+ is better.
• MFAA or FBAA member: These industry associations require ongoing education and professional standards.
• ACL number: Every licensed broker must hold an Australian Credit Licence or be an authorised credit representative. You can check ASIC's register.
• Reviews: Google reviews and word-of-mouth are often more reliable than polished websites.
• Specialisation: If your situation is complex (self-employed, investment, SMSF), ask if the broker has handled similar cases before.

The broker process: what to expect

Most broker engagements follow the same steps:

1. Discovery call (15–30 min): The broker learns your situation, goals, and timeline
2. Fact find: You provide income, expenses, assets, and liabilities — usually via a secure online form
3. Lender selection: The broker identifies 2–3 suitable lenders and explains the trade-offs
4. Application: You choose a lender and the broker lodges the application with full documentation
5. Assessment: The lender assesses your application (typically 3–10 business days)
6. Conditional approval: The lender issues approval subject to valuation and final documents
7. Settlement: Funds are released, and the broker receives their commission from the lender

Frequently asked questions

Is a mortgage broker the same as a bank?

No. A bank lends you their own money. A broker is an independent intermediary who helps you choose between multiple lenders — they don't lend money themselves. A broker's value is in the comparison and the expertise, not the funds.

Can a broker access rates I can't get myself?

Sometimes, yes. Some lenders offer pricing discounts to brokers that aren't available over the counter. More importantly, brokers know which lenders are genuinely competitive for your specific profile — a rate that looks good online may not be the best rate you can get.

What if the broker recommends a loan I don't like?

You're under no obligation to proceed with any recommendation. A broker must give you a written credit proposal that explains why they recommended that loan. You can ask for alternatives or simply walk away — there's no cost involved until your loan actually settles.

Do I still need a conveyancer or solicitor if I use a broker?

Yes. A mortgage broker handles the finance side. You'll still need a conveyancer or solicitor to handle the legal transfer of the property. They are separate professionals with separate fees.