Mortgage Broker or Bank: Which Is Better for Your Home Loan?

When it's time to get a home loan, you face a choice that could cost — or save — you tens of thousands of dollars: go straight to your bank, or use a mortgage broker. It sounds simple, but the two paths are fundamentally different in ways most borrowers don't fully understand. In the September 2025 quarter, 77.3% of all new home loans in Australia were arranged through a broker — a record high. That's nearly 8 in 10 borrowers. Here's why, and whether the same approach makes sense for you.

The Fundamental Difference

When you walk into a bank, you're talking to a salesperson for that bank's products. They can tell you everything about their home loans — but they can't tell you whether another lender's product is better for your situation. They have no reason to, and no legal obligation to.

A mortgage broker works differently. They sit on your side of the table. They have access to dozens of lenders — banks, credit unions, and non-bank lenders — and their job is to find the loan that best fits your needs across all of them. And crucially, since 2021, they are legally required to do exactly that.

How Mortgage Brokers Are Paid

One of the most common questions people have is: "If a broker is free to me, how do they make money — and does that create a conflict?" It's a fair question, and the answer is worth understanding.

Brokers are paid by the lender, not the borrower, through two types of commission:

Commission rates are now largely standardised across lenders — specifically to reduce the incentive for brokers to favour one lender over another. Combined with the Best Interests Duty, the clawback clause also aligns the broker's interest with yours: if they put you in the wrong loan and you refinance within two years, they lose their commission. They're financially motivated to get it right first time.

About 85% of brokers charge clients zero fees. In rare cases — usually for very small loans under $250,000 or highly complex situations — a broker may charge a fee, which must be disclosed upfront before you proceed.

Broker vs. Bank: Side by Side

5 Situations Where a Broker Wins Clearly

1. You're a First Home Buyer

The home loan market is genuinely complex. There are hundreds of products, dozens of lenders, government scheme eligibility requirements, LMI considerations, and offset account trade-offs to navigate. A broker maps all of that for you in one conversation — and at no cost. Going directly to one bank means you're making a major financial decision with one data point.

2. You're Self-Employed or Have Non-Standard Income

The big four banks can be notoriously rigid when assessing self-employed applicants, requiring two years of tax returns and applying conservative income calculations. Non-bank lenders and specialist lenders on a broker's panel often have far more flexible policies for business owners, sole traders, contractors, and casual workers. A broker knows which lenders will treat your income most favourably.

3. You Want to Buy an Investment Property

Banks will eventually cap how much they'll lend you once you hold multiple properties. A broker can spread your lending across multiple institutions, helping you maintain borrowing capacity across a growing portfolio while also finding the best interest-only rates, offset structures, and loan setups for your investment strategy.

4. You Haven't Refinanced in the Last 2 Years

If you haven't reviewed your mortgage recently, there's a very good chance you're paying the "loyalty tax" — a higher rate than new customers. A broker can benchmark your current rate against the market across dozens of lenders in minutes and tell you whether switching makes financial sense after factoring in discharge and application costs.

5. You've Been Knocked Back by a Bank

A decline from one lender doesn't mean you can't get a loan — it means that lender's policy doesn't suit your profile. Every lender uses different credit criteria, income calculations, and risk appetites. A broker knows the policies across their entire panel and can identify which lenders are most likely to approve your application without you accumulating credit enquiries from multiple failed applications.

When Going Direct to a Bank Can Make Sense

To be balanced: there are situations where going direct is reasonable.

• You have a deeply embedded banking relationship: Some customers with large deposits, premium banking packages, and long-term relationships can leverage that to negotiate retention pricing that a broker can't access on their behalf.
• The lender doesn't work with brokers: A small number of lenders — typically online-only banks — offer products exclusively direct. If you've done your own research and found one of these offers the best deal for your situation, going direct is the only option.
• Your situation is genuinely simple: Large deposit, PAYG income, one property, buying in a straightforward market — in this case, the benefit of a broker is smaller (though not zero). You'll still benefit from rate comparison and application support, but the complexity advantage is reduced.

What to Look For in a Mortgage Broker

Not all brokers are equal. Before you engage one, check these basics:

The Bottom Line

The reason 77% of Australians now use a mortgage broker isn't a marketing phenomenon — it's a rational response to a complex market. A broker gives you access to more lenders, has a legal obligation to act in your interests (that banks don't have), costs you nothing in the vast majority of cases, and handles the paperwork. The only scenario where going direct to a bank is clearly better is if you have a product or relationship that simply can't be matched on the open market.

For most Australians — especially first home buyers, investors, and self-employed borrowers — the question isn't really "broker or bank?" It's "which broker?"

Sources: MFAA Quarterly Market Share Report (Sept 2025); ASIC Best Interests Duty guidance; Home Loan Experts; Canstar; Hunter Galloway; Parliamentary Joint Committee on Corporations and Financial Services