A mortgage broker compares loans from a panel of lenders and handles the application for you, usually at no direct cost, because the lender pays the broker’s commission. Going direct to a bank means dealing with one lender’s products, which can work well if you already know what you want or you’re using a lender that doesn’t work with brokers. Brokers arranged a record 81.6% of new home loans in the June 2026 quarter. Neither route guarantees a lower rate: the best rate comes from comparing widely and negotiating.
How a mortgage broker works
- You share your income, expenses, debts, deposit and goals.
- The broker compares loans from lenders on their panel that suit your situation.
- They recommend options and explain why.
- They prepare and lodge the application, and manage it through to settlement.
Since 2021, mortgage brokers have been legally required to act in your best interests and to prioritise your interests when recommending a loan. Ask how many lenders are on their panel and how they chose the recommended loan.
How brokers are paid
Most brokers are paid by the lender, not by you:
- Upfront commission: a percentage of the loan amount when it settles
- Trail commission: a smaller ongoing percentage of the loan balance while the loan stays with that lender
Some brokers charge a fee for complex loans or if the loan is closed soon after settlement. Brokers must tell you how they’re paid, so ask for this in writing.
Broker vs going direct
| Mortgage broker | Going direct to a lender | |
|---|---|---|
| Choice | Many lenders on a panel | One lender’s products |
| Cost to you | Usually free | Free |
| Paperwork | Broker manages it | You manage it |
| Lender policy knowledge | Can match you to lenders likely to approve | You find out by applying |
| Rates | Access to the panel’s rates, sometimes with negotiated discounts | Direct and online-only offers, sometimes not available through brokers |
| Legal duty | Must act in your best interests | Must lend responsibly, but represents the bank |
Do brokers get better rates than banks?
Sometimes. Brokers can ask lenders for pricing discounts, and they know which lenders are competing hardest at the time. But some lenders, especially online lenders, only sell direct, and their rates won’t show up through a broker. Whichever route you take, compare against the market yourself. See how to compare home loans.
When a broker is most useful
- Complex situations: self-employed income, low doc loans, irregular income, past credit issues
- Investors building a portfolio, where lender policy matters as much as rate. See why investors use mortgage brokers and how lenders assess investment loans
- First home buyers who want help with schemes, pre-approval and the process
- Time-poor borrowers who’d rather hand over the paperwork
When going direct can make sense
- You already know the lender and product you want
- The best rate for you is from a direct-only lender
- You’re refinancing with your current lender, or asking them to reprice your loan
If you’re going direct, see how to negotiate a lower rate.
Questions to ask a broker
- How many lenders are on your panel, and which major lenders aren’t?
- Why is this loan in my best interests, compared with the other options?
- How much commission will you receive, upfront and trail?
- Do you charge any fees?
- Will you review my loan in future to make sure the rate stays competitive?
What is a better rate worth?
Whether you go direct or use a broker, the goal is the lowest total cost. On a $600,000 loan over 30 years at the 6.63% average owner-occupier variable rate (Canstar, 2 October 2026), here is what a lower rate saves. Our calculations, excluding fees:
| Rate reduction | Saving per month | Saving over 30 years |
|---|---|---|
| 0.10% | about $40 | about $14,300 |
| 0.25% | about $99 | about $35,500 |
| 0.50% | about $196 | about $70,600 |
| 0.84% (average down to the lowest variable rate of 5.79%) | about $327 | about $117,700 |
Brokers wrote 81.6% of all new home loans in the June 2026 quarter, according to the Mortgage & Finance Association of Australia. Under the best interests duty in the National Consumer Credit Protection Act, brokers must act in your best interests when recommending a loan (ASIC).
Frequently asked questions
Do mortgage brokers get better rates than banks?
Sometimes. Brokers can request pricing discounts and know which lenders are competitive, but some direct-only lenders aren’t available through brokers. Compare the broker’s recommendation with the wider market before deciding.
How are mortgage brokers paid?
Usually by the lender, through an upfront commission when the loan settles and an ongoing trail commission while the loan remains with that lender. Brokers must disclose how they’re paid.
Does a broker cost me anything?
For most standard home loans, no. Some brokers charge fees for complex loans, or recover commission from you if the loan is closed or refinanced soon after settlement. Ask for any fees in writing up front.
Sources
- MFAA, Mortgage broker market share reaches record 81.6%
- ASIC Moneysmart, Choosing a home loan
General information only. It does not consider your objectives, financial situation or needs and is not credit advice.