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.

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.

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.

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 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

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 money 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
• 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
• Impaired credit: Brokers can find specialist lenders and advise on timing
• Unusual property: Small apartments, rural 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 multiple credit enquiries